Regulation and investment in network Industries: evidence from European telecoms
Grajek, Michał
Regulation and investment in network Industries: evidence from European telecoms by Michał Grajek and Lars-Hendrik Röller - Journal of law and economics Volume 55, number 1 .
We provide evidence of an inherent trade-off between access regulation and investment incentives in telecommunications by using a comprehensive data set covering more than 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 have a negative effect on 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 investments by incumbents encourage regulated access provision
00222186
HB73 JOU
Regulation and investment in network Industries: evidence from European telecoms by Michał Grajek and Lars-Hendrik Röller - Journal of law and economics Volume 55, number 1 .
We provide evidence of an inherent trade-off between access regulation and investment incentives in telecommunications by using a comprehensive data set covering more than 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 have a negative effect on 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 investments by incumbents encourage regulated access provision
00222186
HB73 JOU