Cooperative Investment, Access, and Uncertainty
35 Pages Posted: 2 Dec 2016
Date Written: November 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