A Regulatory Framework for New and Emerging Markets

Pio Baake, Ulrich Kamecke and Christian Wey

MPRA Paper from University Library of Munich, Germany

Abstract: The future of the information society crucially depends on investments in upgrading existing infrastructures and building new networks. Traditional cost-based regulation, which focuses on issues of static efficiency and service-based competition necessarily has negative effects on innovation incentives and the emergence of infrastructure-based competition in the highly dynamic telecommunications industry. This paper presents a regulatory framework for new infrastructures, which makes ex ante regulation contingent to the tendency towards effective competitive structures. Unlike the standard Significant Market Power-test (SMP), this approach takes a longer term perspective and therefore secures operators' investment incentives. The proposal has several desirable incentive effects. Firstly, it counters incentives to free-ride on investments by potential competitors, and secondly, it makes preemptive and other predatory practices by the investing firm less attractive. As a result, our proposal of contingent regulation in emerging markets promotes infrastructure-based competition in telecommunications.

Keywords: new markets; infrastructure investments; regulation (search for similar items in EconPapers)
JEL-codes: K23 L43 L90 L96 (search for similar items in EconPapers)
Date: 2005-12
New Economics Papers: this item is included in nep-com and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published in International Journal of Digital Economics 60 (2005): pp. 123-146

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:2518

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