Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/112761
Authors: 
Briglauer, Wolfgang
Gugler, Klaus
Haxhimusa, Adhurim
Year of Publication: 
2015
Series/Report no.: 
ZEW Discussion Papers 15-048
Abstract: 
This paper employs firm-level panel data of 57 incumbent and entrant firms for 23 European countries in the decade from 2003 to 2012. We examine the impact of service- and facility-based competition on firm-level investment as well as the strategic effects underlying infrastructure investment decisions. At the same time we explicitly model the structural dynamics of broadband investment by means of a flexible accelerator model. The empirical specification employs dynamic panel estimation techniques which allows us to account for various sources of endogeneity. We find that facility-based competition exerts a positive and significant impact on both incumbents and entrants implying that incumbents' and entrants' investment decisions are strategic complements. Moreover, we find that intermodal competition in terms of fixed-mobile substitution exerts different effects at the firm level. Finally, we show that service-based competition appears to have no significant impact on the investment decision of incumbents and entrants. However, with respect to the later phase of market liberalization, service-based competition exerts a negative impact on entrants' investment. Our results thus also provide relevant policy guidance on the role of service-based competition in regulating emerging high-speed broadband infrastructure.
Subjects: 
investment dynamics
regulation
service-based competition
facility-based competition
strategic effects
JEL: 
L43
L52
L96
Document Type: 
Working Paper

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