Competition Enhancing Regulation and Diffusion of Innovation: The Case of Broadband Networks

49 Pages Posted: 28 Jul 2011

See all articles by Harald Gruber

Harald Gruber

European Investment Bank

Pantelis Koutroumpis

Oxford Martin Programme of Technological and Economic Change; University of Oxford - Institute for New Economic Thinking at the Oxford Martin School; Imperial College Business School

Date Written: July 2011

Abstract

The paper assesses the scope for competition inducing infrastructure regulation in furthering the diffusion of innovation. The paper uses data on the adoption of broadband services comprising a global panel of 167 countries. The effects of different regulatory provisions are assessed. Inter-firm competition in general and intra-platform competition on the incumbent’s DSL network in particular accelerate adoption of broadband, whereas there is little evidence that inter-platform over different access technologies and intra-platform competition on cable have such effects. Retail competition has about a twice as strong effect than local loop unbundling in furthering diffusion. The effect deriving from service competition is more powerful than the effect of provisions that induce competitors in investing. The diffusion enhancing effect from regulatory access provisions however dissipates after 3-4 years. These results are robust under different hypotheses of reverse causality and taking into account regulatory metrics and variable endogeneity.

Keywords: Broadband, regulation, innovation, service competition, platform competition, local loop unbundling

JEL Classification: L96, L51, O33

Suggested Citation

Gruber, Harald and Koutroumpis, Pantelis, Competition Enhancing Regulation and Diffusion of Innovation: The Case of Broadband Networks (July 2011). Available at SSRN: https://ssrn.com/abstract=1898125 or http://dx.doi.org/10.2139/ssrn.1898125

Harald Gruber (Contact Author)

European Investment Bank ( email )

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Pantelis Koutroumpis

Oxford Martin Programme of Technological and Economic Change ( email )

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University of Oxford - Institute for New Economic Thinking at the Oxford Martin School ( email )

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Imperial College Business School ( email )

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