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|
|Date of revision:|
|Publication status:||Published in Telecommunications Policy|
|Contact details of provider:|| Postal: 79 JFK Street, Cambridge, MA 02138|
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