Fiber investment and access under uncertainty: long-term contracts, risk premia, and access options

Marc Bourreau, Carlo Cambini, Steffen Hoernig and Ingo Vogelsang
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Carlo Cambini: Politecnico di Torino

Journal of Regulatory Economics, 2020, vol. 57, issue 2, No 1, 105-117

Abstract: Abstract Regulated access schemes shape incentives for both investment and entry in next-generation networks. We study in a general duopoly setting whether and how risk premia, access options or long-term contracts improve those incentives as compared to standard access pricing. The first two do so: Risk premia guarantee highest coverage, while distorting retail pricing. Access options safeguard undistorted retail competition, but are not effective in the most costly areas. On the other hand, long-term contracts have little scope to increase coverage because they intensify retail competition.

Keywords: Next generation networks; Uncertainty; Risk premium; Access options; Long-term contracts (search for similar items in EconPapers)
JEL-codes: L51 L96 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11149-020-09402-3

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