Investment and welfare implications of the ownership structure of overlapping networks

Duarte Brito and Pedro Pereira

Information Economics and Policy, 2008, vol. 20, issue 1, 38-53

Abstract: We analyze the impact of the ownership structure of cable television firms on the incentives to upgrade the cable networks to offer telecommunication services. First, we show that dual ownership of a local telephone network and a cable network, compared with separate ownership, may increase or decrease incentives to invest in upgrading the cable television network. Coordination economies benefit dual ownership, and business-stealing benefits separate ownership. Second, we perform a welfare analysis of the investment decision and third, a welfare analysis of the ownership structure.

Date: 2008
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