Working Paper: CEPR ID: DP9013
Authors: Marc Bourreau; Carlo Cambini; Steffen Hoernig
Abstract: We analyze competition between vertically integrated infrastructure operators that provide access in different geographical areas. A regulator may impose a uniform access price, set local access rates, or deregulate access locally. We analyze the impact of these alternative regulatory regimes on network investments. While cost-based access leads to both suboptimal rollout and duplication, uniform access prices bring too much duplication. Deregulation in competitive areas can spur investment and lead to social optimum, or call for continued regulatory intervention, depending on the resulting wholesale equilibrium.
Keywords: Geographical access regulation; Infrastructure investment; Next generation networks
JEL Codes: L51; L96
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cost-based access regulation (D45) | suboptimal network rollout (D85) |
| cost-based access regulation (D45) | excessive duplication (Y60) |
| uniform access prices (D49) | excessive duplication (Y60) |
| deregulation in competitive areas (L43) | enhanced investment incentives (E22) |
| deregulation in competitive areas (L43) | socially optimal outcome (D61) |
| regulator's role in setting access charges (L98) | optimal investment behaviors (G11) |