New Competition in Telecommunications Markets: Regulatory Pricing Principles

28 Pages Posted: 22 Apr 2002

See all articles by Paul de Bijl

Paul de Bijl

CPB Netherlands Bureau of Economic Policy Analysis

Martin Peitz

University of Mannheim - Department of Economics

Date Written: March 2002

Abstract

Launching and stimulating competition in telecommunications markets is an important policy goal. It contains two elements: to encourage entry and to make competition effective such that consumers benefit. The first one requires that entrants can make profits after investing in infrastructure so that they have an incentive to invest. The second one requires prices to be sufficiently low so that consumers enjoy higher net utilities. At a first glance, these two elements seem difficult to achieve at the same time. In this paper, we consider price regulation in the retail and wholesale market and answer to what extent such regulatory policy can stimulate competition. Our main finding is that, in the short run, asymmetric access price regulation is an effective instrument to make the entrant and consumers better off.

JEL Classification: L96, L51, L13

Suggested Citation

de Bijl, Paul W.J. and Peitz, Martin, New Competition in Telecommunications Markets: Regulatory Pricing Principles (March 2002). CESifo Working Paper Series No. 678. Available at SSRN: https://ssrn.com/abstract=305364

Paul W.J. De Bijl

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
The Hague, 2508 GM
Netherlands
+31 70 3383380 (Phone)
+31 70 3383350 (Fax)

Martin Peitz (Contact Author)

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany
+49 621 181-1835 (Phone)

HOME PAGE: http://peitz.vwl.uni-mannheim.de/

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