Competition for access; spectrum rights and downstream access in wireless telecommunications
We analyse downstream access and capacity choice in the market for wireless telecommunications, where spectrum rights are owned by vertically integrated duopolists and may be traded. In the market for wireless telecommunications, radio spectrum is an essential input. Prior to network construction, the incumbents may offer contracts for capacity to an entrant, granting service-based access on the network they will construct. Alternatively, when spectrum trading is allowed, they may sell part of their license, allowing the entrant to build its own network and enter as an infrastructure player. We find that in this Cournot setting, access is generally provided, as incumbents compete to appropriate the profits of serving a differentiated market through the entrant. Although selling spectrum rights instead of network capacity leads to a loss of economies of scale in infrastructure construction, infrastructure-based entry may dominate as a result of a strategic effect. By delegating capacity choice to the entrant, the access providing incumbent can commit to compete more aggressively, causing its rival incumbent to reduce capacity. A lower aggregate capacity will increase prices and thereby profits.
|Date of creation:||Mar 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Postbus 80510, 2508 GM Den Haag|
Phone: (070) 338 33 80
Fax: (070) 338 33 50
Web page: http://www.cpb.nl/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gonzalez-Maestre, M., 1997.
"Divisionalization and Delegation in Oligopoly,"
UFAE and IAE Working Papers
403.97, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- David Spector, 2011.
"Exclusive contracts and demand foreclosure,"
RAND Journal of Economics,
RAND Corporation, vol. 42(4), pages 619-638, December.
- Polasky, Stephen, 1992.
"Divide and conquer On the profitability of forming independent rival divisions,"
Elsevier, vol. 40(3), pages 365-371, November.
- Stephen Polasky, 1993. "Divide And Conquer: On The Profitability Of Forming Independent Rival Divisions," Boston College Working Papers in Economics 210, Boston College Department of Economics.
- Rey, Patrick & Tirole, Jean, 2007.
"A Primer on Foreclosure,"
Handbook of Industrial Organization,
- Corchon, Luis C., 1991.
"Oligopolistic competition among groups,"
Elsevier, vol. 36(1), pages 1-3, May.
- Caillaud, Bernard & Rey, Patrick, 1994.
"Strategic aspects of vertical delegation,"
CEPREMAP Working Papers (Couverture Orange)
- Chaim Fershtman & Kenneth L. Judd & Ehud Kalai, 1990.
"Observable Contracts: Strategic Delegation and Cooperation,"
879, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Fershtman, Chaim & Judd, Kenneth L & Kalai, Ehud, 1991. "Observable Contracts: Strategic Delegation and Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 551-59, August.
- B. Douglas Bernheim & Michael D. Whinston, .
96008, Stanford University, Department of Economics.
- B. Douglas Bernheim & Michael D. Whinston, 1996. "Exclusive Dealing," NBER Working Papers 5666, National Bureau of Economic Research, Inc.
- Bernheim, B.D., 1992. "Exclusive Dealing," Harvard Institute of Economic Research Working Papers 1622, Harvard - Institute of Economic Research.
- Baye, Michael R & Crocker, Keith J & Ju, Jiandong, 1996. "Divisionalization, Franchising, and Divestiture Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 86(1), pages 223-36, March.
- Höffler, Felix & Schmidt, Klaus M., 2008.
"Two tales on resale,"
International Journal of Industrial Organization,
Elsevier, vol. 26(6), pages 1448-1460, November.
- Höffler, Felix & Schmidt, Klaus M., 2008. "Two tales on resale," Munich Reprints in Economics 19443, University of Munich, Department of Economics.
- Höffler, Felix & Schmidt, Klaus M., 2007. "Two Tales on Resale," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 198, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Höeffler, Felix & Schmidt, Klaus M., 2007. "Two Tales on Resale," CEPR Discussion Papers 6248, C.E.P.R. Discussion Papers.
- Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
- Ordover, Janusz & Shaffer, Greg, 2007. "Wholesale access in multi-firm markets: When is it profitable to supply a competitor?," International Journal of Industrial Organization, Elsevier, vol. 25(5), pages 1026-1045, October.
- Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 185-199.
- Hart, O. & Tirole, J., 1990. "Vertical Integration And Market Foreclosure," Working papers 548, Massachusetts Institute of Technology (MIT), Department of Economics.
- Michael A. Salinger, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, Oxford University Press, vol. 103(2), pages 345-356.
When requesting a correction, please mention this item's handle: RePEc:cpb:discus:123. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.