Policy Constellation Matters: Evidence from Investment in the Telecommunications Industry in European Countries
28 Pages Posted: 6 Apr 2016
Date Written: March 2016
Various forms of regulation affecting investment in the telecommunications industry have been investigated thoroughly. However, previous literature has largely overlooked the issue of regulatory constellation. Using data for 28 European countries for the period between 1997 and 2010, this study explores how price regulation on fixed and mobile networks affects the overall investment incentives in the telecommunications sector, and how various regulations interact. Results from fixed-effects panel data analysis show that the effect of price regulation on investment activities on fixed or mobile networks could be positive, zero or negative. The effect depends on the type of price regulation on other networks. To promote investment incentives, therefore, price regulation on different types of networks should be carefully aligned with each other.
Keywords: Policy constellation, Investment, Price regulation, Marginal effect
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