Cooperative Investment, Access, and Uncertainty
27 Pages Posted: 2 Nov 2016
Date Written: October 18, 2016
This paper compares the impacts of traditional one‒way access obligations and the new regulatory scheme of co-investment on the roll-out of network infrastructures. We show that compulsory access leads to smaller roll-out, first because it reduces the returns from investment, and second because in the presence of uncertainty it provides access seekers with an option whose exercise hurts investors. Co-investment without access obligations leads to risk sharing and eliminates the access option, implying highest network coverage. Allowing for access on top of co-investment actually decreases welfare if the access price is low.
Keywords: Co-Investment, Access Obligations, Next Generation Networks, Uncertainty
JEL Classification: L96, L51
Suggested Citation: Suggested Citation