Cooperative investment, access, and uncertainty

Marc Bourreau, Carlo Cambini, Steffen Hoernig

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This paper compares the impacts of traditional one-way access obligations and the new regulatory scheme of co-investment on the roll-out of network infrastructures. We show that compulsory access leads to smaller roll-out, first because it reduces the returns from investment, and second because in the presence of uncertainty it provides access seekers with an option whose exercise hurts investors. Co-investment without access obligations leads to risk sharing and eliminates the access option, implying highest network coverage. Allowing for access on top of co-investment actually decreases welfare if the access price is low.

Original languageEnglish
Pages (from-to)78-106
Number of pages29
JournalInternational Journal of Industrial Organization
Volume56
DOIs
Publication statusPublished - 1 Jan 2018

Fingerprint

Uncertainty
Obligation
Investors
Access price
Exercise
Risk sharing

Keywords

  • Access obligations
  • Co-investment
  • Next generation networks
  • Uncertainty

Cite this

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abstract = "This paper compares the impacts of traditional one-way access obligations and the new regulatory scheme of co-investment on the roll-out of network infrastructures. We show that compulsory access leads to smaller roll-out, first because it reduces the returns from investment, and second because in the presence of uncertainty it provides access seekers with an option whose exercise hurts investors. Co-investment without access obligations leads to risk sharing and eliminates the access option, implying highest network coverage. Allowing for access on top of co-investment actually decreases welfare if the access price is low.",
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author = "Marc Bourreau and Carlo Cambini and Steffen Hoernig",
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Cooperative investment, access, and uncertainty. / Bourreau, Marc; Cambini, Carlo; Hoernig, Steffen.

In: International Journal of Industrial Organization, Vol. 56, 01.01.2018, p. 78-106.

Research output: Contribution to journalArticle

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