A Critical Review of the â€œLadder of Investmentâ€ Approach
The â€œladder of investmentâ€ is a regulatory approach proposed by Cave (2006), which has been widely embraced by national regulatory authorities in the European telecommunications sector. The approach entails providing entrants, successively, with different levels of accessâ€”the â€œrungsâ€ of the investment ladder, while inducing them to climb the ladder by setting an access charge that increases over time or by withdrawing access obligations after some pre-determined date (i.e., by setting sunset clauses). Proponents of the ladder of investment approach claim that such regulatory measures would make service-based entry and facility-based entry complementsâ€”albeit they have been traditionally viewed as substitutesâ€”in promoting competition. The regulators, thus, have shown a strong interest in this approach. The paper provides a critical review of the ladder of investment approach by setting out its two underlying assumptions and discussing their validity with references to the related industrial organization literature.
|Date of creation:||2010|
|Publication status:||Published in Telecommunications Policy|
|Contact details of provider:|| Postal: 79 JFK Street, Cambridge, MA 02138|
Web page: http://www.hks.harvard.edu/
More information through EDIRC
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.:
- João Vareda & Steffen Hoernig, 2007.
"The race for telecoms infrastructure investment with bypass: Can access regulation achieve the first best?,"
29, Portuguese Competition Authority.
- Bastos Vareda, João Miguel & Hoernig, Steffen, 2007. "The Race for Telecoms Infrastructure Investment with Bypass: Can Access Regulation Achieve the First-best?," CEPR Discussion Papers 6203, C.E.P.R. Discussion Papers.
- Vareda, João & Hoernig, Steffen, 2007. "The race for telecoms infrastructure investment with bypass: Can access regulation achieve the first best?," FEUNL Working Paper Series wp524, Universidade Nova de Lisboa, Faculdade de Economia.
- Marc Bourreau & Johan Hombert & Jerome Pouyet & Nicolas Schutz, 2011.
"Upstream Competition between Vertically Integrated Firms,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 59(4), pages 677-713, December.
- Marc Bourreau & Johan Hombert & Jérôme Pouyet & Nicolas Schutz, 2010. "Upstream Competition between Vertically Integrated Firms," PSE Working Papers hal-00440126, HAL.
- Marc Bourreau & Johan Hombert & Jérôme Pouyet & Nicolas Schutz, 2011. "Upstream Competition between Vertically Integrated Firms," Post-Print hal-00656608, HAL.
- Hori, Keiichi & Mizuno, Keizo, 2006. "Access pricing and investment with stochastically growing demand," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 795-808, July.
- João Vareda, 2007.
"Access Regulation under Asymmetric Information about Demand,"
30, Portuguese Competition Authority.
- Vareda, João, 2007. "Access Regulation under Asymmetric Information about Demand," FEUNL Working Paper Series wp525, Universidade Nova de Lisboa, Faculdade de Economia.
- Distaso, Walter & Lupi, Paolo & Manenti, Fabio M., 2006.
"Platform competition and broadband uptake: Theory and empirical evidence from the European union,"
Information Economics and Policy,
Elsevier, vol. 18(1), pages 87-106, March.
- Walter Distaso & Paolo Lupi & Fabio M. Manenti, 2005. "Platform Competition and Broadband Uptake: Theory and Empirical Evidence from the European Union," Industrial Organization 0504019, EconWPA.
- David E. M Sappington, 2005. "On the Irrelevance of Input Prices for Make-or-Buy Decisions," American Economic Review, American Economic Association, vol. 95(5), pages 1631-1638, December.
- Duarte Brito & Pedro Pereira, 2006.
"Access to Bottleneck Inputs under Oligopoly: a Prisoners Dilemma?,"
16, Portuguese Competition Authority.
- Duarte Brito & Pedro Pereira, 2010. "Access to Bottleneck Inputs under Oligopoly: A Prisoners’ Dilemma?," Southern Economic Journal, Southern Economic Association, vol. 76(3), pages 660-677, January.
- Philip Gayle & Dennis Weisman, 2007. "Are input prices irrelevant for make-or-buy decisions?," Journal of Regulatory Economics, Springer, vol. 32(2), pages 195-207, October.
- Bourreau, Marc & Dogan, Pinar, 2005.
"Unbundling the local loop,"
European Economic Review,
Elsevier, vol. 49(1), pages 173-199, January.
- Guthrie, Graeme, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Working Paper Series 3851, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
- Dogan, Pinar & Bourreau, Marc, 2005.
""Build or Buy" Strategies in the Local Loop,"
Working Paper Series
rwp05-060, Harvard University, John F. Kennedy School of Government.
- Valletti, Tommaso M., 0. "The theory of access pricing and its linkage with investment incentives," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 659-675, November.
- Graeme Guthrie, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 925-972, December.
When requesting a correction, please mention this item's handle: RePEc:hrv:hksfac:4777447. 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: (Office for Scholarly Communication)
If references are entirely missing, you can add them using this form.