DP9376 Cooperative Investment, Uncertainty and Access
Author(s): | Marc Bourreau, Carlo Cambini, Steffen Hoernig |
Publication Date: | March 2013 |
Keyword(s): | Access Obligations, Co-investment, Networks, Uncertainty |
JEL(s): | D21, D43, G31, L5, L96 |
Programme Areas: | Industrial Organization |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=9376 |
We investigate cooperative investment for the deployment of a new infrastructure, and how it interacts with access obligations and demand uncertainty. Co-investment increases total coverage only if service differentiation and/or cost savings from joint investment, in particular due to high uncertainty, are high. Mandated access reduces incentives for co-investment not only through lower returns but also by the existence of the access option itself. Voluntary access provision increases infrastructure coverage but reduces social welfare by softening competition.