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New Competition in Telecommunications Markets: Regulatory Pricing Principles


  • Paul de Bijl
  • Martin Peitz


Launching and stimulating competition in telecommunications markets is an important policy goal. It contains two elements: to encourage entry and to make competition effective such that consumers benefit. The first one requires that entrants can make profits after investing in infrastructure so that they have an incentive to invest. The second one requires prices to be sufficiently low so that consumers enjoy higher net utilities. At a first glance, these two elements seem difficult to achieve at the same time. In this paper, we consider price regulation in the retail and wholesale market and answer to what extent such regulatory policy can stimulate competition. Our main finding is that, in the short run, asymmetric access price regulation is an effective instrument to make the entrant and consumers better off.

Suggested Citation

  • Paul de Bijl & Martin Peitz, 2002. "New Competition in Telecommunications Markets: Regulatory Pricing Principles," CESifo Working Paper Series 678, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_678

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    References listed on IDEAS

    1. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
    2. de Bijl, Paul W. J. & Peitz, Martin, 2004. "Dynamic regulation and entry in telecommunications markets: a policy framework," Information Economics and Policy, Elsevier, vol. 16(3), pages 411-437, September.
    3. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-564, May.
    4. Perrucci, Antonio & Cimatoribus, Michela, 1997. "Competition, convergence and asymmetry in telecommunications regulation," Telecommunications Policy, Elsevier, vol. 21(6), pages 493-512, July.
    5. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, January.
    6. Doh-Shin Jeon & Jean-Jacques Laffont & Jean Tirole, 2004. "On the Receiver-Pays Principle," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 85-110, Spring.
    7. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(1), pages 1-25, February.
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    Cited by:

    1. Peitz, Martin, 2005. "Asymmetric access price regulation in telecommunications markets," European Economic Review, Elsevier, vol. 49(2), pages 341-358, February.
    2. Sun Me Choi & Christian Fernando Libaque-Saenz & Sang-woo Lee & Myeong-Cheol Park, 2016. "Margin squeeze in the Internet backbone interconnection market: a case study of Korea," Telecommunication Systems: Modelling, Analysis, Design and Management, Springer, vol. 61(3), pages 531-542, March.
    3. de Bijl, Paul W. J. & Peitz, Martin, 2004. "Dynamic regulation and entry in telecommunications markets: a policy framework," Information Economics and Policy, Elsevier, vol. 16(3), pages 411-437, September.
    4. Laurent BENZONI & Bruno DEFFAINS & Anh Tuc NGUYEN & Olivier SALESSE, 2011. "Competitive Dynamics Between MNOs in the Mobile Telecommunications Single Market: Lessons from the U.S. Experience," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(82), pages 127-145, 2nd quart.
    5. Paul Bijl & Martin Peitz, 2009. "Access regulation and the adoption of VoIP," Journal of Regulatory Economics, Springer, vol. 35(2), pages 111-134, April.

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