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Do we (still) need to regulate fixed network retail markets?

Wolfgang Briglauer, Georg Götz and Anton Schwarz ()
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Anton Schwarz: Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR)

No 200826, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: In the beginning of fixed network liberalisation in Europe in the late 1990s, the main concern of regulators was to lower calls prices. This was done by introducing wholesale regulation and promoting service based competition. Some years later, the concern of some regulators turned from too high calls prices to too low calls prices which might ‘squeeze’ entrants out of the market. We look at a simple model in which this development is explained by increasing competitive pressure from an ‘outside opportunity’, e.g. mobile telephony. We conclude that a margin squeeze is not necessarily used by the incumbent as a device to drive competitors out of the market and increase market power but can also result from increased inter-model competition. If this is the case, we argue that regulators should consider alternatives to cost oriented access prices such as retail minus or complete deregulation.

Keywords: access regulation; vertical integration; foreclosure; price squeeze; telecommunications; fixed networks (search for similar items in EconPapers)
JEL-codes: L12 L41 L42 L50 L96 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2008
New Economics Papers: this item is included in nep-com, nep-mic, nep-net and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:200826

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