IDEAS home Printed from https://ideas.repec.org/a/eee/iepoli/v22y2010i2p192-199.html
   My bibliography  Save this article

Access regulation under asymmetric information about the entrant's efficiency

Author

Listed:
  • Vareda, João

Abstract

We study the impact of access regulation on an entrant's decision whether to invest in a telecommunications network or to ask for access when the regulator cannot observe its efficiency level. We show that an efficient entrant may have incentives to target low demand after entry in order to convince the regulator that it needs cheap access in the future. Therefore, the regulator must set access prices, contingent on demand, which penalize the inefficient entrant. We further show that, although linear prices are not always sufficient to promote the investment of an efficient entrant without introducing distortions, two-part tariffs already allow the regulator to achieve this objective.

Suggested Citation

  • Vareda, João, 2010. "Access regulation under asymmetric information about the entrant's efficiency," Information Economics and Policy, Elsevier, vol. 22(2), pages 192-199, May.
    • Handle: RePEc:eee:iepoli:v:22:y:2010:i:2:p:192-199
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167-6245(09)00070-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Caillaud, Bernard & Tirole, Jean, 2004. "Essential facility financing and market structure," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 667-694, March.
    2. Joao Vareda & Steffen Hoernig, 2007. "The race for telecoms infrastructure investment with bypass: can access regulation achieve the first best?," Nova SBE Working Paper Series wp524, Universidade Nova de Lisboa, Nova School of Business and Economics.
    3. Valletti, Tommaso, 1998. "Two-part access pricing and imperfect competition," Information Economics and Policy, Elsevier, vol. 10(3), pages 305-323, September.
    4. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    5. Gans, Joshua S, 2001. "Regulating Private Infrastructure Investment: Optimal Pricing for Access to Essential Facilities," Journal of Regulatory Economics, Springer, vol. 20(2), pages 167-189, September.
    6. Bourreau, Marc & Dogan, Pinar, 2005. "Unbundling the local loop," European Economic Review, Elsevier, vol. 49(1), pages 173-199, January.
    7. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
    8. Paula Sarmento, 2003. "Entry Regulation under Asymmetric Information about Demand: A Signalling Model Approach," CEF.UP Working Papers 0304, Universidade do Porto, Faculdade de Economia do Porto.
    9. Brito, Duarte & Pereira, Pedro & Vareda, João, 2010. "Can two-part tariffs promote efficient investment on next generation networks?," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 323-333, May.
    10. Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
    11. Cave, Martin & Vogelsang, Ingo, 0. "How access pricing and entry interact," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 717-727, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jeong-Yoo Kim & Sawoong Kang, 2014. "Entry Invoking," Korean Economic Review, Korean Economic Association, vol. 30, pages 247-271.
    2. Marc Bourreau & Joeffrey Drouard, 2014. "Progressive entry and the incentives to invest in alternative infrastructures," Journal of Regulatory Economics, Springer, vol. 45(3), pages 329-351, June.
    3. Cambini, Carlo & Silvestri, Virginia, 2012. "Technology investment and alternative regulatory regimes with demand uncertainty," Information Economics and Policy, Elsevier, vol. 24(3), pages 212-230.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brito, Duarte & Pereira, Pedro & Vareda, João, 2010. "Can two-part tariffs promote efficient investment on next generation networks?," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 323-333, May.
    2. Joao Vareda, 2007. "Access regulation under asymmetric information about demand," Nova SBE Working Paper Series wp525, Universidade Nova de Lisboa, Nova School of Business and Economics.
    3. 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.
    4. João Vareda, 2011. "Quality upgrades and bypass under mandatory access," Journal of Regulatory Economics, Springer, vol. 40(2), pages 177-197, October.
    5. Inderst, Roman & Peitz, Martin, 2012. "Network investment, access and competition," Telecommunications Policy, Elsevier, vol. 36(5), pages 407-418.
    6. Inderst, Roman & Kühling, Jürgen & Neumann, Karl-Heinz & Peitz, Martin, 2010. "Investitionen, Wettbewerb und Netzzugang bei NGA: Ergebnisse einer Studie im Auftrag des Bundesministeriums für Wirtschaft und Technologie," WIK Discussion Papers 344, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    7. Brito, Duarte & Pereira, Pedro & Vareda, João, 2012. "Incentives to invest and to give access to non-regulated new technologies," Information Economics and Policy, Elsevier, vol. 24(3), pages 197-211.
    8. Manenti, Fabio M. & Scialà, Antonio, 2013. "Access regulation, entry and investments in telecommunications," Telecommunications Policy, Elsevier, vol. 37(6), pages 450-468.
    9. Joao Vareda & Steffen Hoernig, 2007. "The race for telecoms infrastructure investment with bypass: can access regulation achieve the first best?," Nova SBE Working Paper Series wp524, Universidade Nova de Lisboa, Nova School of Business and Economics.
    10. Steffen Hoernig & Ingo Vogelsang, 2012. "The ambivalence of two-part tariffs for bottleneck access," Nova SBE Working Paper Series wp568, Universidade Nova de Lisboa, Nova School of Business and Economics.
    11. 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.
    12. 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.
    13. Vareda João & Hoernig Steffen, 2010. "Racing for Investment under Mandatory Access," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-31, July.
    14. Flacher, David & Jennequin, Hugues, 2014. "Access regulation and geographic deployment of a new generation infrastructure," Telecommunications Policy, Elsevier, vol. 38(8), pages 741-759.
    15. Keizo Mizuno & Ichiro Yoshino, 2015. "Overusing a bypass under cost-based access regulation: underinvestment with spillovers," Journal of Regulatory Economics, Springer, vol. 47(1), pages 29-57, February.
    16. Avenali, Alessandro & Matteucci, Giorgio & Reverberi, Pierfrancesco, 2010. "Dynamic access pricing and investment in alternative infrastructures," International Journal of Industrial Organization, Elsevier, vol. 28(2), pages 167-175, March.
    17. Dogan, Pinar & Bourreau, Marc & Manant, Matthieu, 2010. "A Critical Review of the “Ladder of Investment†Approach," Scholarly Articles 4777447, Harvard Kennedy School of Government.
    18. Bourreau, Marc & Lupi, Paolo & Manenti, Fabio M., 2014. "Old technology upgrades, innovation, and competition in vertically differentiated markets," Information Economics and Policy, Elsevier, vol. 29(C), pages 10-31.
    19. Marc Bourreau & Pınar Doğan & Romain Lestage, 2014. "Level of access and infrastructure investment in network industries," Journal of Regulatory Economics, Springer, vol. 46(3), pages 237-260, December.
    20. Brito, Duarte & Pereira, Pedro & Vareda, João, 2011. "An assessment of the equality of access and no-regulation approaches to next generation networks," Telecommunications Policy, Elsevier, vol. 35(9), pages 818-826.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:iepoli:v:22:y:2010:i:2:p:192-199. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505549 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.