Date: 2012
Type: Article
Technology investment and alternative regulatory regimes with demand uncertainty
Information Economics and Policy, 2012, Vol. 24, No. 3-4, pp. 212-230
CAMBINI, Carlo, SILVESTRI, Virginia, Technology investment and alternative regulatory regimes with demand uncertainty, Information Economics and Policy, 2012, Vol. 24, No. 3-4, pp. 212-230
- https://hdl.handle.net/1814/31179
Retrieved from Cadmus, EUI Research Repository
A vertically integrated incumbent and an OLO (Other Licensed Operator) compete in the market for broadband access. The incumbent has the option to invest in building a Next Generation Network that covers all urban areas with similar demand structures. The investment return in terms of demand increase is uncertain. We compare the impact of different access regulation regimes – full regulation, partial regulation (only the copper network is regulated), risk sharing – on investment incentives and social welfare. We find that, when the alternative for the OLO is using the copper network rather than leaving the market entirely, exclusion of the OLO does not necessarily happen in equilibrium even when the incumbent is better in offering value-added services. Risk sharing emerges as the most preferable regime both from a consumer and a social welfare perspective for a large range of parameters.
Additional information:
First published online: December 2013
Cadmus permanent link: https://hdl.handle.net/1814/31179
Full-text via DOI: 10.1016/j.infoecopol.2012.08.003
ISSN: 0167-6245; 1873-5975
Initial version: http://hdl.handle.net/1814/21477
Version: Published version of EUI RSCAS WP 2012/15
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