Access Regulation and Investment in Next Generation Networks: A Ranking of Regulatory Regimes

32 Pages Posted: 23 Jul 2009

See all articles by Rainer Nitsche

Rainer Nitsche

affiliation not provided to SSRN

Lars Wiethaus

affiliation not provided to SSRN

Date Written: June 1, 2009

Abstract

This paper analyses how different types of access regulation to next generation networks affect investments and consumer welfare. The model consists of an investment stage with uncertain returns and subsequent quantity competition. The access price is a function of investment costs and the regulatory regime. A regime with fully distributed costs or a regulatory holiday induces highest investments, followed by risk-sharing and long-run-incremental cost regulation. Risk-sharing creates most consumer welfare, followed by regimes with fully distributed costs, long-run-incremental costs and regulatory holiday, respectively. Risk-sharing benefits consumers as it combines relatively high ex-ante investment incentives with strong ex-post competitive intensity.

Keywords: regulation, competition, telecommunications, broadband, strategic investment

JEL Classification: L51, L96, L1, K23

Suggested Citation

Nitsche, Rainer and Wiethaus, Lars, Access Regulation and Investment in Next Generation Networks: A Ranking of Regulatory Regimes (June 1, 2009). ESMT Working Paper No. 09-003, Available at SSRN: https://ssrn.com/abstract=1436920 or http://dx.doi.org/10.2139/ssrn.1436920

Rainer Nitsche (Contact Author)

affiliation not provided to SSRN ( email )

Lars Wiethaus

affiliation not provided to SSRN ( email )

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