Regulation and investment in network industries: Evidence from European telecoms

Michal Grajek and Lars-Hendrik Röller
Additional contact information
Lars-Hendrik Röller: ESMT European School of Management and Technology

No ESMT-09-004, ESMT Research Working Papers from ESMT European School of Management and Technology

Abstract: We provide evidence of an inherent trade-off between access regulation and investment incentives in telecommunications by using a comprehensive data set covering 70+ fixed-line operators in 20 countries over 10 years. Our econometric model accommodates: different investment incentives for incumbents and entrants; a strategic interaction of entrants’ and incumbents’ investments; and endogenous regulation. We find access regulation to negatively affect both total industry and individual carrier investment. Thus promoting market entry by means of regulated access undermines incentives to invest in facilities-based competition. Moreover, we find evidence of a regulatory commitment problem: higher incumbents’ investments encourage provision of regulated access.

Keywords: telecommunications; access regulation; unbundling; investment (search for similar items in EconPapers)
JEL-codes: C51 L59 L96 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2009-06-15
New Economics Papers: this item is included in nep-eec, nep-net and nep-reg
References: Add references at CitEc
Citations: View citations in EconPapers (30)

Published in Journal of Law and Economics 55(1): 189–216 .

Downloads: (external link)
http://static.esmt.org/publications/workingpapers/ESMT-09-004.pdf First version, 2009 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:esm:wpaper:esmt-09-004

Access Statistics for this paper

More papers in ESMT Research Working Papers from ESMT European School of Management and Technology Contact information at EDIRC.
Bibliographic data for series maintained by ESMT Faculty Publications ().