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Geographic access rules and investments

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RSCAS_2013_28.pdf (422.15 KB)
2013/28
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https://hdl.handle.net/1814/26678
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1028-3625
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2013
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Working Paper
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Next generation networks; Infrastructure investment; Geographical access regulation; Deregulation; L51; L96
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EUI RSCAS; 2013/28; Florence School of Regulation; Energy
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BOURREAU, Marc, CAMBINI, Carlo, HOERNIG, Steffen, Geographic access rules and investments, EUI RSCAS, 2013/28, Florence School of Regulation, Energy - https://hdl.handle.net/1814/26678
Abstract
We analyze competition between vertically-integrated operators who build infrastructure and provide access in different geographical areas. Under full commitment, the regulator sets socially-optimal access rates that depend on the local degree of infrastructure competition. If he can only commit to implementing a single access. price, the regulator can impose a uniform access price or deregulate access in competitive areas. While uniform access pricing leads to suboptimal investment, deregulation can spur investment. Still, deregulation is not an ideal solution to the commitment problem, as it tends to involve multiple and inefficient equilibria at the wholesale level, with either too little or too much investment
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