Access Regulation, Entry, and Investment in Telecommunications
This paper presents a model of competition between an incumbent and an entrant firm in telecommunications. The entrant has the option to enter the market with or without having preliminary invested in its own infrastructure; in case of facility based entry, the entrant has also the option to invest in the provision of enhanced services. In case of resale based entry the entrant needs access to the incumbent network. Unlike the rival, the incumbent has always the option to upgrade the existing network to provide advanced services. We study the impact of access regulation on the type of entry and on firms' investments. Without regulation, we find that the incumbent sets the access charge to prevent resale based entry and this overstimulates rival's investment that may turn out to be socially inefficient. Access regulation may discourage welfare enhancing investments, thus also inducing a socially inefficient outcome. We extend the model to account for negotiated interconnection in case of facilities based entry.
|Date of creation:||24 Jun 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Convento, Via delle Fontanelle, 19, 50014 San Domenico di Fiesole (FI) Italy|
Web page: http://www.eui.eu/RSCAS/
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.:
- Duarte Brito & Pedro Pereira & João Vareda, 2008.
"Can Two-Part Tariffs Promote Efficient Investment on Next Generation Networks?,"
34, Portuguese Competition Authority.
- Brito, Duarte & Pereira, Pedro & Vareda, João, 2010. "Can two-part tariffs promote efficient investment on next generation networks?," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 323-333, May.
- Avenali, Alessandro & Matteucci, Giorgio & Reverberi, Pierfrancesco, 2010. "Dynamic access pricing and investment in alternative infrastructures," International Journal of Industrial Organization, Elsevier, vol. 28(2), pages 167-175, March.
- Bourreau, Marc & Dogan, Pinar, 2005.
"Unbundling the local loop,"
European Economic Review,
Elsevier, vol. 49(1), pages 173-199, January.
- M. Bourreau & P. Dogan, .
"Build or Buy Strategies in the Local Loop,"
33647, Harvard University OpenScholar.
- Bourreau, Marc & Dogan, PInar & Manant, Matthieu, 2010.
"A critical review of the "ladder of investment" approach,"
Elsevier, vol. 34(11), pages 683-696, December.
- M. Bourreau & P. Dogan & M. Manant, . "A critical review of the ladder of investment approach," Working Paper 33654, Harvard University OpenScholar.
- Cave, Martin & Vogelsang, Ingo, 0. "How access pricing and entry interact," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 717-727, November.
- Foros, Oystein, 2004. "Strategic investments with spillovers, vertical integration and foreclosure in the broadband access market," International Journal of Industrial Organization, Elsevier, vol. 22(1), pages 1-24, January.
- Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
When requesting a correction, please mention this item's handle: RePEc:rsc:rsceui:2011/37. 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: (RSCAS web unit)
If references are entirely missing, you can add them using this form.