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23rd European Regional ITS Conference, Vienna 2012 >
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| Title: | | Co-investments and tacit collusion in regulated network industries: Experimental evidence  |
| Authors: | | Krämer, Jan Vogelsang, Ingo |
| Issue Date: | | 2012 |
| Series/Report no.: | | 23rd European Regional Conference of the International Telecommunication Society, Vienna, Austria, 1-4 July 2012 |
| Abstract: | | With the use of a laboratory experiment, we show the effects of co-investments on coverage, competition and price collusion in regulated network industries. On the one hand, co-investments turn out not to be a significant driver of new infrastructure investments beyond the level achieved by access regulation and they seem to facilitate tacit price collusion. On the other hand, co-investments economize on infrastructure investment costs and necessitate communication, which partially offset the aforementioned effects. In fact, communication between the firms on their future coverage, especially outside co-investments, seems to have a positive effect on investments. However, the surprising message of the experiment is that tacit collusion happens under co-investment although there is no reason to believe that it should and although we made almost every effort to prevent it. Our results indicate that regulators should evaluate co-investments with scrutiny as there are definite drawbacks that must be considered. |
| Subjects: | | experimental economics network industries co-investment collusion regulation |
| JEL: | | C92 L13 L50 L97 |
| Document Type: | | Conference Paper |
| Appears in Collections: | | 23rd European Regional ITS Conference, Vienna 2012
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