Seeking the Links between Telecommunications Investment and Competition

37 Pages Posted: 20 Aug 2010 Last revised: 21 Nov 2013

See all articles by Paola Garrone

Paola Garrone

Politecnico di Milano

Michele Zaccagnino

Polytechnic University of Milan

Date Written: June 19, 2013

Abstract

Using country-level time series and firm-level panel data, we show that telecommunications investment and competition have evolved quite independently, at least in OECD economies. The literature findings on this subject are quite mixed, but we here strengthen empirical evidence employing a set of models and methods. As a first analysis, unknown breakpoints were sought in the investment series of each country. Structural changes emerged, but they do not show a clear-cut relationship with liberalization and unbundling events. The incumbent’s investment was then focused on. Product market competition does not play an autonomous role, a result that was confirmed by both causality analyses and micro-econometric investment models. However, it moderates the impact of pro-entry regulation. The unbundling regime has been found to reduce the incumbent’s incentives to invest, unless a certain degree of competition has already emerged on the service market.

Keywords: communications, investment, competition

JEL Classification: L96, L51

Suggested Citation

Garrone, Paola and Zaccagnino, Michele, Seeking the Links between Telecommunications Investment and Competition (June 19, 2013). Available at SSRN: https://ssrn.com/abstract=1661604 or http://dx.doi.org/10.2139/ssrn.1661604

Paola Garrone (Contact Author)

Politecnico di Milano ( email )

piazza Leonardo da Vinci 32
Milano, 20133
Italy
+39-02-23992742 (Phone)

Michele Zaccagnino

Polytechnic University of Milan ( email )

Piazza Leonardo da Vinci
Milan, Milan 20133
Italy

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