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Title:Regulation and investment in network industries: Evidence from European telecoms PDF Logo
Authors:Grajek, Michał
Röller, Lars-Hendrik
Issue Date:2009
Series/Report no.:SFB 649 discussion paper 2009,039
Abstract:We provide evidence of an inherent trade-off between access regulation and investment incentives in telecommunications by using a comprehensive data set covering 70+ fixed-line operators in 20 countries over 10 years. Our econometric model accommodates: different investment incentives for incumbents and entrants; a strategic interaction of entrants' and incumbents' investments; and endogenous regulation. We find access regulation to negatively affect both total industry and individual carrier investment. Thus promoting market entry by means of regulated access undermines incentives to invest in facilities-based competition. Moreover, we find evidence of a regulatory commitment problem: higher incumbents' investments encourage provision of regulated access.
Subjects:Telecommunications
access regulation
unbundling
investment
JEL:C51
L59
L96
Document Type:Working Paper
Appears in Collections:SFB 649 Discussion Papers, HU Berlin

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