Access Regulation and Welfare

Romain Lestage () and David Flacher ()
Additional contact information
Romain Lestage: TEMEP, College of Engineering, Seoul National University
David Flacher: Centre d'Economie de l'universite Paris Nord (CEPN)

No 201185, TEMEP Discussion Papers from Seoul National University; Technology Management, Economics, and Policy Program (TEMEP)

Abstract: Abstract In a 2006 paper, Graeme Guthrie underlined that “[T]he impact of access price level on investment is not yet fully understood” and that “even less is known about the overall impact on welfare” (Guthrie 2006, p. 965). Although important progress has been made on the former issue, the latter remains largely underinvestigated. This paper contributes to addressing this question by analyzing the optimal access price in different investment games. Our main findings are as follows: 1. When only one firm can invest and when only service-based competition is feasible, the optimal access price is such as the flat part is as high as possible and the variable part equals the marginal cost. 2. The optimal variable part is lower when only service-based competition is possible than when several firms can invest, although there is too much duplication in the latter case. 3. When several firms can invest, the optimal access price is such as the flat part is as high as possible and the variable part is higher than the marginal cost. These results arise because the variable part determines both private incentives to invest and to duplicate and the extent to which investment and duplication are socially desirable.

Keywords: Access regulation; infrastructure investment; welfare. (search for similar items in EconPapers)
JEL-codes: L13 L43 L51 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2011-12, Revised 2011-12
New Economics Papers: this item is included in nep-bec, nep-com and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:snv:dp2009:201185

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