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A Regulatory Framework for New and Emerging Markets

Author

Listed:
  • Baake, Pio
  • Kamecke, Ulrich
  • Wey, Christian

Abstract

The future of the information society crucially depends on investments in upgrading existing infrastructures and building new networks. Traditional cost-based regulation, which focuses on issues of static efficiency and service-based competition necessarily has negative effects on innovation incentives and the emergence of infrastructure-based competition in the highly dynamic telecommunications industry. This paper presents a regulatory framework for new infrastructures, which makes ex ante regulation contingent to the tendency towards effective competitive structures. Unlike the standard Significant Market Power-test (SMP), this approach takes a longer term perspective and therefore secures operators' investment incentives. The proposal has several desirable incentive effects. Firstly, it counters incentives to free-ride on investments by potential competitors, and secondly, it makes preemptive and other predatory practices by the investing firm less attractive. As a result, our proposal of contingent regulation in emerging markets promotes infrastructure-based competition in telecommunications.

Suggested Citation

  • Baake, Pio & Kamecke, Ulrich & Wey, Christian, 2005. "A Regulatory Framework for New and Emerging Markets," MPRA Paper 2518, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2518
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    File URL: https://mpra.ub.uni-muenchen.de/2518/1/MPRA_paper_2518.pdf
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    References listed on IDEAS

    as
    1. Michael H. Riordan, 1992. "Regulation and Preemptive Technology Adoption," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 334-349, Autumn.
    2. Joshua Gans & Stephen King, 2003. "Access Holidays for Network Infrastructure Investment," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 10(2), pages 163-178.
    3. Cave, Martin & Vogelsang, Ingo, 0. "How access pricing and entry interact," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 717-727, November.
    4. Hazlett Thomas W. & Havenner Arthur M., 2003. "The Arbitrage Mirage: Regulated Access Prices with Free Entry in Local Telecommunications Markets," Review of Network Economics, De Gruyter, vol. 2(4), pages 1-11, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ingo Vogelsang, 2012. "Incentive Regulation, Investments and Technological Change," Chapters, in: Gerald R. Faulhaber & Gary Madden & Jeffrey Petchey (ed.), Regulation and the Performance of Communication and Information Networks, chapter 4, Edward Elgar Publishing.
    2. Torsten Steinrücken & Sebastian Jaenichen, 2009. "Preisregulierung zum Schutz der Verbraucher: Wirkungen auf Werbung und Wohlfahrt," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(3), pages 188-201.
    3. B.M. Sadowski & M. de Rooij & Jan Smits, 2006. "State aid, open access and market size: two cases of fith network implementation in Dutch municipalities," Working Papers 06-09, Eindhoven Center for Innovation Studies, revised May 2006.
    4. repec:dau:papers:123456789/119 is not listed on IDEAS
    5. Michał Grajek & Lars-Hendrik Röller, 2012. "Regulation and Investment in Network Industries: Evidence from European Telecoms," Journal of Law and Economics, University of Chicago Press, vol. 55(1), pages 189-216.
    6. Lars-Hendrik Röller, 2009. "Effects of regulation on investment behaviour in network industries: The European telecommunications industry," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(10), pages 12-15, May.
    7. Piatek, Stanislaw, 2008. "Investment and Regulation in Telecommunications," MPRA Paper 23995, University Library of Munich, Germany.
    8. Müller, Christine & Growitsch, Christian & Wissner, Matthias, 2010. "Regulierung und Investitionsanreize in der ökonomischen Theorie. IRIN Working Paper im Rahmen des Arbeitspakets: Smart Grid-gerechte Weiterentwicklung der Anreizregulierung," WIK Discussion Papers 349, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    9. Jan Markendahl & Martin Johnsson, 2007. "Ambient networking and related business concepts as support for regulatory initiatives and competition," Netnomics, Springer, vol. 8(1), pages 105-121, October.

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    More about this item

    Keywords

    new markets; infrastructure investments; regulation;
    All these keywords.

    JEL classification:

    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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