Economics at your fingertips  

Investments in next generation access infrastructures under regulatory uncertainty

Markos Tselekounis () and Dimitris Varoutas ()

Telecommunications Policy, 2013, vol. 37, issue 10, 879-892

Abstract: This article studies the impact of regulatory uncertainty on an incumbent’s incentives to undertake the socially optimal investments in NGA networks. Thus, a regulatory non-commitment setting in which the regulator sets the access price after the deployment of the NGA network is used. In particular, it is assumed that the regulator sets the access price at the marginal cost of providing the access with some probability and gives an access markup, which equals the average cost of the investments, with the complementary probability. It is found that when the slope of the marginal investment cost function is not particularly steep in relation to the impact of investments on demand, the incumbent underinvests compared to the socially optimal investment level. On the contrary, in a more realistic case when the impact of investments on demand is low in relation to the slope of the marginal investment cost function, the incumbent may overinvest or underinvest depending on the probability of incorporating an access markup into the access price.

Keywords: Access regulation; Dynamic efficiency; Investment incentives; Regulatory uncertainty; Social welfare; Telecommunications (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

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:

Ordering information: This journal article can be ordered from
http://www.elsevier. ... /30471/bibliographic

DOI: 10.1016/j.telpol.2013.06.001

Access Statistics for this article

Telecommunications Policy is currently edited by Erik Bohlin

More articles in Telecommunications Policy from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-07-22
Handle: RePEc:eee:telpol:v:37:y:2013:i:10:p:879-892