Dynamic access pricing and investment in alternative infrastructures

Alessandro Avenali, Giorgio Matteucci and Pierfrancesco Reverberi

International Journal of Industrial Organization, 2010, vol. 28, issue 2, 167-175

Abstract: We analyze the impact of access price regulation on the entrants' investment in network quality. We consider a dynamic framework where developing an alternative infrastructure requires both time and a captive customer base. We show that a multi-period schedule where regulated access charges rise over time is critical to foster efficient infrastructure investment. Nonetheless, a sunset clause on regulation dilutes investment incentives. We also show that, in the absence of regulatory commitment, the time-dependent schedule may not be robust to sequential entry. Hence, to preserve investment by early entrants, access charges should depend both on time and the entry period, in such a way that each entrant is provided with the same dynamic access conditions. The relevance of these issues carries over to the prospective deployment of new access infrastructures, the so-called Next Generation Access networks.

Keywords: Access; pricing; Infrastructure; investment; Regulatory; commitment; Innovation; incentives; High-speed; broadband (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (40)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:28:y:2010:i:2:p:167-175

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