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Access Price Regulation, Investment and Entry in Telecommunications

Author

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  • Kaisa Kotakorpi

    (School of Management, University of Tampere)

Abstract

We consider a model with a vertically integrated monopolist network provider who faces rival operators in the retail market. We examine the network operator’s incentives to invest in a technology that increases demand. We find that investments are below the social optimum even when there is no regulation, and access price regulation further reduces investment incentives. The underinvestment problem may have negative effects on the viability of competition and in the presence of access price regulation, rivals are most likely to be foreclosed when they would bring highest benefits to consumers.

Suggested Citation

  • Kaisa Kotakorpi, 2004. "Access Price Regulation, Investment and Entry in Telecommunications," Working Papers 0435, Tampere University, Faculty of Management and Business, Economics.
    • Handle: RePEc:tam:wpaper:0435
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    File URL: http://urn.fi/urn:isbn:951-44-6192-4
    File Function: First version, 2004
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    Citations

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    Cited by:

    1. Kotakorpi, Kaisa, 2006. "Access price regulation, investment and entry in telecommunications," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 1013-1020, September.
    2. Robert S. Pindyck, 2005. "Pricing Capital Under Mandatory Unbundling and Facilities Sharing," NBER Working Papers 11225, National Bureau of Economic Research, Inc.
    3. repec:vuw:vuwscr:19098 is not listed on IDEAS
    4. Tselekounis, Markos & Varoutas, Dimitris & Martakos, Drakoulis, 2014. "A CDS approach to induce facilities-based competition over NGA networks," Telecommunications Policy, Elsevier, vol. 38(3), pages 311-331.
    5. de Braganca, Gabriel Fiuza & Rocha, Katia & Moreira, Rafael Henrique Rodrigues, 2008. "Real Options and the Regulation of Brazilian Fixed-Line Telephone Operators: The Mark-up on the Cost of Capital," Working Paper Series 19098, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    6. Gabriel Godofredo Fiuza de Bragança, 2005. "A Remuneração de Redes nas Telecomunicações e a Nova Orientação a Custos: Avaliação e Perspectivas Para a Telefonia Fixa Brasileira," Discussion Papers 1104, Instituto de Pesquisa Econômica Aplicada - IPEA.

    More about this item

    Keywords

    access pricing; regulation; investment; foreclosure;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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