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The race for telecoms infrastructure investment with bypass: Can access regulation achieve the first best?

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Author Info
Vareda, João
Hoernig, Steffen

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Abstract

We analyze the impact of mandatory access on the infrastructure investments of two competing communications networks, and show that for low (high) access charges ?rms wait (preempt each other). Contrary to previous results, under preemption a higher access charge can delay ?rst investment. While ?rst-best investment cannot be achieved with a ?xed access tari¤, simple instruments such as banning access in the future, or granting access holidays right after investment, can improve e¢ ciency. The former forces investment when it would happen too late, while the latter allows for lower access charges in order to delay the second investment when it would happen too early.

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Paper provided by Universidade Nova de Lisboa, Faculdade de Economia in its series FEUNL Working Paper Series with number wp524.

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Length: 30 pages
Date of creation: 2007
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Handle: RePEc:unl:unlfep:wp524

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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.:
  1. Bourreau, Marc & Dogan, Pinar, 2005. "Unbundling the local loop," European Economic Review, Elsevier, vol. 49(1), pages 173-199, January. [Downloadable!] (restricted)
  2. Hoppe, Heidrun C. & Lehmann-Grube, Ulrich, 2005. "Innovation timing games: a general framework with applications," Journal of Economic Theory, Elsevier, vol. 121(1), pages 30-50, March. [Downloadable!] (restricted)
  3. Keiichi Hori & Keizo Mizuno, 2004. "Network Investment and Competition with Access-to-Bypass," Econometric Society 2004 Australasian Meetings 138, Econometric Society. [Downloadable!]
  4. Joshua S. Gans & Stephen P. King, 2004. "Access Holidays and the Timing of Infrastructure Investment," The Economic Record, The Economic Society of Australia, vol. 80(248), pages 89-100, 03. [Downloadable!] (restricted)
  5. Hori, Keiichi & Mizuno, Keizo, 2006. "Access pricing and investment with stochastically growing demand," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 795-808, July. [Downloadable!] (restricted)
  6. Marc Bourreau & Pınar Doğan, 2006. ""Build-or-Buy" Strategies in the Local Loop," American Economic Review, American Economic Association, vol. 96(2), pages 72-76, May. [Downloadable!]
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  7. Gans, Joshua S, 2001. "Regulating Private Infrastructure Investment: Optimal Pricing for Access to Essential Facilities," Journal of Regulatory Economics, Springer, vol. 20(2), pages 167-89, September. [Downloadable!] (restricted)
  8. João Vareda & Steffen Hoernig, 2007. "The race for telecoms infrastructure investment with bypass: Can access regulation achieve the first best?," Working Papers 29, Portuguese Competition Authority. [Downloadable!]
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  9. Bijl, P.W.J. de & Peitz, M., 2004. "Unbundling the local loop : one-way access and imperfect competition," Discussion Paper 25, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
  10. Michael H. Riordan, 1992. "Regulation and Preemptive Technology Adoption," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 334-349, Autumn. [Downloadable!] (restricted)
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  11. Graeme Guthrie, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 925-972, December.
  12. Simon, Leo K & Stinchcombe, Maxwell B, 1989. "Extensive Form Games in Continuous Time: Pure Strategies," Econometrica, Econometric Society, vol. 57(5), pages 1171-1214, September. [Downloadable!] (restricted)
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(explanations, 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.)

  1. Vareda, João, 2007. "Unbundling and Incumbent Investment in Quality Upgrades and Cost Reduction," FEUNL Working Paper Series wp526, Universidade Nova de Lisboa, Faculdade de Economia. [Downloadable!]
  2. João Vareda, 2007. "Unbundling and Incumbent Investment in Quality Upgrades and Cost Reduction," Working Papers 31, Portuguese Competition Authority. [Downloadable!]
  3. João Vareda & Steffen Hoernig, 2007. "The race for telecoms infrastructure investment with bypass: Can access regulation achieve the first best?," Working Papers 29, Portuguese Competition Authority. [Downloadable!]
    Other versions:
  4. Duarte Brito & Pedro Pereira & João Vareda, 2008. "Incentives to Invest and to Give Access to Non-Regulated Next Generation Networks," Working Papers 08-10, NET Institute, revised Oct 2008. [Downloadable!]
    Other versions:
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