Cost and Benefits from Infrastructure Competition. Estimating Welfare Effects from Broadband Access Competition

Felix Höffler ()
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Felix Höffler: Max Planck Institute for Research on Collective Goods, Bonn, Germany

No 2005_1, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: Competition between parallel infrastructures incorporates opposing welfare effects. The gain from reduced deadweight loss might be outweighed by the inefficient duplication of an existing infrastructure. Using data from broadband internet access for Western Europe 2000-2004, this paper investigates which effect prevails empirically. Infrastructure competition between DSL and cable TV had a significant and positive impact on the broadband penetration. Comparing the additional social surplus attributable to cable competition with the cable investments, we conclude that infrastructure competition has not been welfare enhancing. A theoretical model is provided, formalizing why the effect of competition on penetration might be limited.

Keywords: Infrastructure Competition; Service Competition; Broadband; Internet; Cable TV; DSL (search for similar items in EconPapers)
JEL-codes: K23 L12 L51 L86 L96 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2005-02, Revised 2005-06
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:mpg:wpaper:2005_01

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