Fiber investment and access under uncertainty: long-term contracts, risk premia, and access options

Marc Bourreau, Carlo Cambini, Steffen Hoernig, Ingo Vogelsang

Research output: Contribution to journalArticle

Abstract

Regulated access schemes shape incentives for both investment and entry in next-generation networks. We study in a general duopoly setting whether and how risk premia, access options or long-term contracts improve those incentives as compared to standard access pricing. The first two do so: Risk premia guarantee highest coverage, while distorting retail pricing. Access options safeguard undistorted retail competition, but are not effective in the most costly areas. On the other hand, long-term contracts have little scope to increase coverage because they intensify retail competition.

Original languageEnglish
Pages (from-to)105-117
JournalJournal Of Regulatory Economics
Volume57
Issue number2
DOIs
Publication statusPublished - Apr 2020

Keywords

  • Access options
  • Long-term contracts
  • Next generation networks
  • Risk premium
  • Uncertainty

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