Cooperative Investment, Uncertainty and Access

Abstract

We investigate cooperative investment for the deployment of a new infrastructure, and how it interacts with access obligations and demand uncertainty. Co-investment increases total coverage only if service differentiation and/or cost savings from joint investment, in particular due to high uncertainty, are high. Mandated access reduces incentives for co-investment not only through lower returns but also by the existence of the access option itself. Voluntary access provision increases infrastructure coverage but reduces social welfare by softening competition.

Keywords: Access Obligations, Co-investment, Networks, Uncertainty

JEL Classification: D21, D43, G31, L5, L96