IDEAS home Printed from https://ideas.repec.org/a/eee/telpol/v40y2016i10p1032-1051.html
   My bibliography  Save this article

Exclusion and regulatory intervention in investment sharing agreements

Author

Listed:
  • Ribeiro, Vitor Miguel

Abstract

An incumbent and an other licensed operator may jointly invest to develop fiber network infrastructure while an outsider operator invests to develop cable network infrastructure. Regardless whether the investment sharing agreement occurs, market exclusion of the facility-based outsider does not hold. Considering the prevalence of the investment sharing agreement, it is not necessarily true that each insider contributes with an investment share of 50% since there may exist a trade-off between bargaining power and investment participation. Although full integration avoids duplication of investment costs, social welfare may be higher under partial integration. Presuming the increasing run for fiber, the framework proposes the inclusion of a fourth service-based operator that requires access to the fiber network infrastructure held by the consortium. This may define a tight oligopoly with simultaneous presence of investment sharing agreement. The service-based outsider is excluded from the retail market when the wholesale access price is unregulated. Subsequently, market exclusion depends on the competitive nature of the outsider firm. Finally, the framework reveals the conditions that legitimize ex-post regulation of the wholesale access price of fiber. An asymmetric regulatory intervention at the wholesale access price level is justified as a means of improving social welfare if the investment effort is excessively high. The same applies if the investment effort is intermediate, provided that an excessively high gap exists between the vertical spillover that affects the fiber consortium in relation to the vertical spillover that affects the cable operator.

Suggested Citation

  • Ribeiro, Vitor Miguel, 2016. "Exclusion and regulatory intervention in investment sharing agreements," Telecommunications Policy, Elsevier, vol. 40(10), pages 1032-1051.
    • Handle: RePEc:eee:telpol:v:40:y:2016:i:10:p:1032-1051
    DOI: 10.1016/j.telpol.2016.07.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308596116300726
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.telpol.2016.07.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Mizuno, Keizo & Yoshino, Ichiro, 2012. "Distorted access regulation with strategic investments: Regulatory non-commitment and spillovers revisited," Information Economics and Policy, Elsevier, vol. 24(2), pages 120-131.
    2. 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.
    3. Inderst, Roman & Peitz, Martin, 2012. "Network investment, access and competition," Telecommunications Policy, Elsevier, vol. 36(5), pages 407-418.
    4. Cambini, Carlo & Silvestri, Virginia, 2013. "Investment sharing in broadband networks," Telecommunications Policy, Elsevier, vol. 37(10), pages 861-878.
    5. Foros, Oystein, 2004. "Strategic investments with spillovers, vertical integration and foreclosure in the broadband access market," International Journal of Industrial Organization, Elsevier, vol. 22(1), pages 1-24, January.
    6. Reinhard Selten, 1973. "A Simple Model of Imperfect Competition, where 4 are Few and 6 are Many," Center for Mathematical Economics Working Papers 008, Center for Mathematical Economics, Bielefeld University.
    7. Nitsche, Rainer & Wiethaus, Lars, 2011. "Access regulation and investment in next generation networks -- A ranking of regulatory regimes," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 263-272, March.
    8. Bourreau, Marc & Cambini, Carlo & Hoernig, Steffen, 2015. "Geographic access markets and investments," Information Economics and Policy, Elsevier, vol. 31(C), pages 13-21.
    9. Marcel Canoy & S. Onderstal, 2003. "Tight oligopolies: in search of proportionate remedies," CPB Document 29, CPB Netherlands Bureau for Economic Policy Analysis.
    10. Steen, Frode & Sørgard, Lars, 2010. "Semicollusion," Foundations and Trends(R) in Microeconomics, now publishers, vol. 5(3), pages 153-228, April.
    11. Marcel Canoy & S. Onderstal, 2003. "Tight oligopolies: in search of proportionate remedies," CPB Document 29.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, April.
    13. Carlo Cambini and Virginia Silvestri, 2012. "Technology Investment and Alternative Regulatory Regimes with Demand Uncertainty," RSCAS Working Papers 2012/15, European University Institute.
    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. Guangyuan Xing & Bing Xia & Jue Guo, 2019. "Sustainable Cooperation in the Green Supply Chain under Financial Constraints," Sustainability, MDPI, vol. 11(21), pages 1-16, October.
    2. Vitor Miguel Ribeiro & Lei Bao, 2021. "Impact of next‐generation access networks on the innovation efficiency of Portuguese municipalities: A spatial econometrics approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(5), pages 1615-1637, October.

    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. Balmera, Roberto E. & Ünverb, Mehmet Bilal, 2016. "Cooperative investment in next generation broadband networks: A review of recent practical cases and literature," 27th European Regional ITS Conference, Cambridge (UK) 2016 148657, International Telecommunications Society (ITS).
    2. Balmer, Roberto E., 2014. "Geographic regulation and cooperative investment in next generation broadband networks," 20th ITS Biennial Conference, Rio de Janeiro 2014: The Net and the Internet - Emerging Markets and Policies 106889, International Telecommunications Society (ITS).
    3. Balmera, Roberto E. & Ünverb, Mehmet Bilal, 2016. "Geographic regulation of next generation broadband networks: A review of practical cases and recent literature," 27th European Regional ITS Conference, Cambridge (UK) 2016 148656, International Telecommunications Society (ITS).
    4. Balmer, Roberto E., 2015. "Geographic regulation of next generation broadband networks: A review of practical cases and recent literature," 26th European Regional ITS Conference, Madrid 2015 127125, International Telecommunications Society (ITS).
    5. Balmer, Roberto, 2013. "Geographic Regulation and Cooperative Investment in Next Generation Broadband Networks - A Review of Recent Literature and Practical Cases," MPRA Paper 54080, University Library of Munich, Germany.
    6. Balmer, Roberto E., 2015. "Cooperative investment in next generation broadband networks: A review of recent practical cases and literature," 26th European Regional ITS Conference, Madrid 2015 127124, International Telecommunications Society (ITS).
    7. Flacher, David & Jennequin, Hugues, 2014. "Access regulation and geographic deployment of a new generation infrastructure," Telecommunications Policy, Elsevier, vol. 38(8), pages 741-759.
    8. Briglauer Wolfgang & Frübing Stefan & Vogelsang Ingo, 2014. "The Impact of Alternative Public Policies on the Deployment of New Communications Infrastructure – A Survey," Review of Network Economics, De Gruyter, vol. 13(3), pages 227-270, September.
    9. Tselekounis, Markos & Varoutas, Dimitris, 2013. "Investments in next generation access infrastructures under regulatory uncertainty," Telecommunications Policy, Elsevier, vol. 37(10), pages 879-892.
    10. Briglauer, Wolfgang & Cambini, Carlo & Fetzer, Thomas & Hüschelrath, Kai, 2017. "The European Electronic Communications Code: A critical appraisal with a focus on incentivizing investment in next generation broadband networks," Telecommunications Policy, Elsevier, vol. 41(10), pages 948-961.
    11. Avenali, Alessandro & Matteucci, Giorgio & Reverberi, Pierfrancesco, 2014. "Broadband investment and welfare under functional and ownership separation," Information Economics and Policy, Elsevier, vol. 28(C), pages 70-82.
    12. Cambini, Carlo & Silvestri, Virginia, 2013. "Investment sharing in broadband networks," Telecommunications Policy, Elsevier, vol. 37(10), pages 861-878.
    13. Lestage, Romain & Flacher, David, 2014. "Infrastructure investment and optimal access regulation in the different stages of telecommunications market liberalization," Telecommunications Policy, Elsevier, vol. 38(7), pages 569-579.
    14. Abrardi, Laura & Cambini, Carlo, 2019. "Ultra-fast broadband investment and adoption: A survey," Telecommunications Policy, Elsevier, vol. 43(3), pages 183-198.
    15. 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.
    16. Klaus Friesenbichler, 2019. "What Explains Aggregate Telecom Investments? Evidence From an EU-OECD Panel," WIFO Working Papers 583, WIFO.
    17. Parcu, Pier Luigi & Silvestri, Virginia, 2013. "Electronic communications regulation in Europe: An overview of past and future problems," 24th European Regional ITS Conference, Florence 2013 88509, International Telecommunications Society (ITS).
    18. Ricardo GONCALVES & Álvaro NASCIMENTO, 2013. "Next Generation Access Networks: The Post-Investment Conundrum," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(92), pages 91-112, 4th quart.
    19. Krämer Jan & Vogelsang Ingo, 2016. "Co-Investments and Tacit Collusion in Regulated Network Industries: Experimental Evidence," Review of Network Economics, De Gruyter, vol. 15(1), pages 35-61, March.
    20. Briglauer, Wolfgang, 2014. "The impact of regulation and competition on the migration from old to new communications infrastructure: Recent evidence from EU27 member states," ZEW Discussion Papers 14-085, ZEW - Leibniz Centre for European Economic Research.

    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:telpol:v:40:y:2016:i:10:p:1032-1051. 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/wps/find/journaldescription.cws_home/30471/description#description .

    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.