EconPapers    
Economics at your fingertips  
 

Technology Investment and Alternative Regulatory Regimes with Demand Uncertainty

Carlo Cambini and Virginia Silvestri

No 2012/15, RSCAS Working Papers from European University Institute

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, compared to Foros (2004), 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.

Keywords: Investment; Regulation; Access pricing; New Technology; Risk Sharing; L51; L96 (search for similar items in EconPapers)
Date: 2012-03-30
New Economics Papers: this item is included in nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

Downloads: (external link)
http://cadmus.eui.eu/bitstream/handle/1814/21477/RSCAS_2012_15.pdf?sequence=1 Full text (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:rsc:rsceui:2012/15

Access Statistics for this paper

More papers in RSCAS Working Papers from European University Institute Convento, Via delle Fontanelle, 19, 50014 San Domenico di Fiesole (FI) Italy. Contact information at EDIRC.
Bibliographic data for series maintained by RSCAS web unit ().

 
Page updated 2025-04-02
Handle: RePEc:rsc:rsceui:2012/15