A vertically integrated incumbent and an OLO (Other Licensed Operator) dynamically 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 price regulation regimes - full regulation, partial regulation (only the copper network is regulated), risk sharing - on investment incentives and social welfare. We find that the OLO gets better access condition in case of partial regulation and exclusion does not necessarily happen in equilibrium even if the incumbent has more ability than the OLO. Moreover, risk sharing emerges as the most preferable regime both from a consumer and a social welfare perspective for a large range of parameters.

Technology Investment and Alternative Regulatory Regimes with Demand Uncertainty / Cambini, Carlo; Silvestri, V.. - In: INFORMATION ECONOMICS AND POLICY. - ISSN 0167-6245. - STAMPA. - 24:4(2012), pp. 212-230. [10.1016/j.infoecopol.2012.08.003]

Technology Investment and Alternative Regulatory Regimes with Demand Uncertainty

CAMBINI, CARLO;
2012

Abstract

A vertically integrated incumbent and an OLO (Other Licensed Operator) dynamically 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 price regulation regimes - full regulation, partial regulation (only the copper network is regulated), risk sharing - on investment incentives and social welfare. We find that the OLO gets better access condition in case of partial regulation and exclusion does not necessarily happen in equilibrium even if the incumbent has more ability than the OLO. Moreover, risk sharing emerges as the most preferable regime both from a consumer and a social welfare perspective for a large range of parameters.
File in questo prodotto:
File Dimensione Formato  
paper_uncertainty_310812.pdf

accesso aperto

Tipologia: 1. Preprint / submitted version [pre- review]
Licenza: PUBBLICO - Tutti i diritti riservati
Dimensione 306.81 kB
Formato Adobe PDF
306.81 kB Adobe PDF Visualizza/Apri
Pubblicazioni consigliate

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11583/2497892
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo