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Do we (still) need to regulate fixed network retail markets?

Author

Listed:
  • Wolfgang Briglauer

    () (Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR))

  • Georg Götz

    () (Justus-Liebig-University Gießen)

  • Anton Schwarz

    () (Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR))

Abstract

In the beginning of fixed network liberalisation in Europe in the late 1990s, the main concern of regulators was to lower calls prices. This was done by introducing wholesale regulation and promoting service based competition. Some years later, the concern of some regulators turned from too high calls prices to too low calls prices which might ‘squeeze’ entrants out of the market. We look at a simple model in which this development is explained by increasing competitive pressure from an ‘outside opportunity’, e.g. mobile telephony. We conclude that a margin squeeze is not necessarily used by the incumbent as a device to drive competitors out of the market and increase market power but can also result from increased inter-model competition. If this is the case, we argue that regulators should consider alternatives to cost oriented access prices such as retail minus or complete deregulation.

Suggested Citation

  • Wolfgang Briglauer & Georg Götz & Anton Schwarz, 2008. "Do we (still) need to regulate fixed network retail markets?," MAGKS Papers on Economics 200826, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:200826
    as

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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/26-2008_briglauer.pdf
    File Function: First version, 2008
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    More about this item

    Keywords

    access regulation; vertical integration; foreclosure; price squeeze; telecommunications; fixed networks;

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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