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Author: Justus Haucap
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper analyzes how competition works in mobile telecommunications markets and, based on this analysis, we discuss whether regulatory intervention in mobile telephone markets is justified from an economic perspective. Starting point of our analysis is the observation that an evaluation of regulatory interventions into mobile telecommunications markets cannot be made without a deeper understanding for competitive processes in mobile telephony. What is of decisive relevance for understanding competition in mobile telephony, is the fact that building a mobile telephone network requires highly specific investments, which take place under significant uncertainty, as investments in 3G networks such as UMTS illustrate. An inevitable consequence of specific investments are sunk costs. Hence, one can only expect firms to extensively invest and innovate if firms can hold a justified expectation to work profitably after they have invested. To cover their capital costs, which are largely fixed and not avoidable, firms need to follow a pricing policy that involves prices above incremental costs. Hence, a key determinant for mobile operators' price policy lies in their cost structure, which is characterized by high fixed and common costs that are also sunk and relatively low incremental costs. In such situations, efficiency demands so-called Ramsey pricing structures, which involves different mark-ups for different services. In contrast, a situation with uniform mark-ups will generally be inefficient. Instead, services with an inelastic demand should carry relatively high prices, while services, for which the demand is rather elastic, should be priced close to marginal costs. Exactly such a pricing structure results when unregulated firms are left to maximize their profits. Hence, the factor that prices and mark-ups differ between different services and markets is an efficiency imperative and not a sign for market failure. Nevertheless the necessity of interconnection and fixed-to-mobile termination may give rise to competition problems. As we argue in this paper, closer analysis shows that these problems do not automatically imply that sector specific regulation is warranted. The same hold for the question of regulated mobile number portability. Instead, an ex post introduction of sector specific regulation can be regarded as a breach of the implicit regulatory contract by the State. This Government hold-up socializes and redistributes operators' profits, while the operators carried the initial investment risk. Such a Government hold-up reduces firms' incentives for investment and innovation and, thereby, also harms consumers in the long run. In addition, there is a real risk of regulatory failure, as empirical evidence demonstrates. Based on these considerations, this paper fiercely advises against sector specific regulation of mobile telephone markets. The social welfare loss that would arise from such regulations are estimated to be enormous.
Author: Justus Haucap
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper analyzes how competition works in mobile telecommunications markets and, based on this analysis, we discuss whether regulatory intervention in mobile telephone markets is justified from an economic perspective. Starting point of our analysis is the observation that an evaluation of regulatory interventions into mobile telecommunications markets cannot be made without a deeper understanding for competitive processes in mobile telephony. What is of decisive relevance for understanding competition in mobile telephony, is the fact that building a mobile telephone network requires highly specific investments, which take place under significant uncertainty, as investments in 3G networks such as UMTS illustrate. An inevitable consequence of specific investments are sunk costs. Hence, one can only expect firms to extensively invest and innovate if firms can hold a justified expectation to work profitably after they have invested. To cover their capital costs, which are largely fixed and not avoidable, firms need to follow a pricing policy that involves prices above incremental costs. Hence, a key determinant for mobile operators' price policy lies in their cost structure, which is characterized by high fixed and common costs that are also sunk and relatively low incremental costs. In such situations, efficiency demands so-called Ramsey pricing structures, which involves different mark-ups for different services. In contrast, a situation with uniform mark-ups will generally be inefficient. Instead, services with an inelastic demand should carry relatively high prices, while services, for which the demand is rather elastic, should be priced close to marginal costs. Exactly such a pricing structure results when unregulated firms are left to maximize their profits. Hence, the factor that prices and mark-ups differ between different services and markets is an efficiency imperative and not a sign for market failure. Nevertheless the necessity of interconnection and fixed-to-mobile termination may give rise to competition problems. As we argue in this paper, closer analysis shows that these problems do not automatically imply that sector specific regulation is warranted. The same hold for the question of regulated mobile number portability. Instead, an ex post introduction of sector specific regulation can be regarded as a breach of the implicit regulatory contract by the State. This Government hold-up socializes and redistributes operators' profits, while the operators carried the initial investment risk. Such a Government hold-up reduces firms' incentives for investment and innovation and, thereby, also harms consumers in the long run. In addition, there is a real risk of regulatory failure, as empirical evidence demonstrates. Based on these considerations, this paper fiercely advises against sector specific regulation of mobile telephone markets. The social welfare loss that would arise from such regulations are estimated to be enormous.
Author: James Morton Herring
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 570
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Book Description
Written by an economist and a former member of the FCC, this work is extremely valuable today because of its detailed coverage of the organization and development of many key precepts still considered basic to the economic regulation of the electronic media. The authors write extensively about the interrelationship of economic and regulatory aspects of public policy and provide an historical overview as well as a close look at regulatory machinery and its functions in the 1930s. Their book is well documented and includes appendices with several key legislative acts and treaties.
Author: Pierre A. Buigues
Publisher: Edward Elgar Publishing
ISBN: 9781843769767
Category : Technology & Engineering
Languages : en
Pages : 496
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Book Description
Contributing to a convergence of legal and economic approaches, The Economics of Antitrust and Regulation in Telecommunications integrates economic theory into current EU antitrust policy within the sector. The book addresses the role of competition and regulatory policies on a number of key issues in telecommunications, such as market definition, collective dominance, access to networks, and allocation of scarce resources.
Author: Gerald R. Faulhaber
Publisher: Edward Elgar Publishing
ISBN: 1781007144
Category : Law
Languages : en
Pages : 378
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Book Description
'Due to their economic characteristics and also to their consequences on many aspects of collective life, information networks have always been at the edge of regulatory innovations and at the center of policy debates. The contributors of this volume combine long term visions of the factors determining regulatory policies with up-to-date analyses of technicalities to be dealt with, to provide the reader with an extended understanding of the issues and constraints shaping the future of digital networks.' Eric Brousseau, Université Paris-Dauphine, France and the European University Institute, Italy Digital markets worldwide are in rapid flux. The Internet and World Wide Web have traditionally evolved in a largely deregulated environment, but recently governments have shown great interest in this rapidly developing sector and are imposing regulations for a variety of reasons that are changing the shape of these industries. This book explores why the industrial organization of broadband ISPs, Internet backbone providers and content/application providers are in such turmoil. The expert contributors straddle the turbulent past of the telecoms sector and also contribute to its exciting though unpredictable future via positive analysis of past communications policies, which is then utilized to deduce lessons to guide future policy making decisions. It is illustrated that broadband ISPs no longer simply provide a conduit for service delivery; they are also involved in producing content and transaction services themselves, in competition with content and delivery providers. The blurring of the traditional lines between these three sectors, as each enters into the others' markets, is highlighted. The conclusion is that we are witnessing the emergence of powerful, competing platforms, linked in complex ways that challenge traditional economic analyses. Exploring governance issues, regulation and investment, next-generation service markets and wireless communication, this book will prove a fascinating and illuminating read for scholars, researchers, post-graduate students and policymakers with an interest in ICT, technology and innovation, economics and industrial organization.
Author: Robert W. Hahn
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Regulation of the use of cellular phones by individuals while driving is now commonplace outside the United States and has been proposed in a number of jurisdictions in the United States. There is growing concern that using cellular phones while driving leads to increases in accidents and fatalities. This paper provides an economic analysis of regulatory options for addressing cellular phone usage by drivers of vehicles. While large uncertainties surrounding both benefits and costs exist, a key conclusion is that banning drivers from using cellular phones is a bad idea. Our best estimate is that the costs of a ban are likely to exceed benefits by more than $20 billion annually. Less intrusive regulation, such as requiring the use of a hands-free device that would allow a driver to use both hands for steering also is not likely to be economically justified. We are doubtful that the net benefits from a ban on drivers' using hand-held phones or a mandate requiring the use of hands-free devices would be positive for three reasons. First, the results of our quantitative benefit-cost analysis suggest that costs are likely to exceed benefits. Second, our best estimates of accidents and fatality reductions do not take into account how drivers would alter their behavior in response to regulation. If regulations were enforced, drivers may simply switch to other risky behaviors. Thus, the net reductions in accidents and fatalities are likely to be overstated, which means the benefits of regulatory interventions could be quite small. Third, the technology is already moving in the direction of voice activation, which is likely to reduce risks. Instead of regulating now, the federal government and the states should collect more systematic information on the relationship between cellular phone use by individuals while driving and accidents. Specifically, governments should attempt to improve estimates of the number of accidents and fatalities associated with cellular phone use. It is possible that accidents are underestimated now. Moreover, an argument can be made that accidents will increase more than linearly as more drivers use cellular phones in vehicles. The federal government should also assess the benefits and costs of introducing promising new technologies that could reduce the risks of accidents associated with drivers' using cellular phones in vehicles.
Author: Harald Gruber
Publisher: Cambridge University Press
ISBN: 1139444476
Category : Business & Economics
Languages : en
Pages : 343
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Book Description
The mobile telecommunications industry is one of the most rapidly growing sectors around the world. This book offers a comprehensive economic analysis of the main determinants of growth in the industry. Harald Gruber demonstrates the importance of competitive entry and the setting of technological standards, both of which play a central role in their contribution to the fast diffusion of technology. Detailed country studies provide empirical evidence for the development of the main themes: the diffusion of mobile telecommunications services, the pricing policies in network industries, the role of entry barriers such as radio spectrum and spectrum allocation procedures. This research-based survey will appeal to a wide range of applied industrial economists within universities, government and the industry itself.
Author: Anastassios Gentzoglanis
Publisher: Edward Elgar Publishing
ISBN: 1849805245
Category : Political Science
Languages : en
Pages : 369
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Book Description
After decades of liberalization of the telecommunications industry around the world and technological convergence that allows for increasing competition, sector-specific regulation of telecommunications has been on the decline. As a result, the telecommunications industry stands in the middle of a debate that calls for either a total deregulation of access to broadband infrastructures or a separation of infrastructure from service delivery. This book proposes new approaches to dealing with the current and future issues of regulation of telecommunication markets on both a regional and a global scale. This volume represents a valuable compendium of ideas regarding global trends in the telecommunications industry that focus on market and regulatory issues and company strategies. With an international cast of contributors, Regulation and the Evolution of the Global Telecommunications Industry also provides insight into topics including: mobile Internet development, structural function and separation, global experiences with next generation networks, technology convergence and the role of regulation, and the regulatory impact on the balance between static and dynamic efficiencies. The empirical evidence and experiences presented here illustrate the diversity of thoughts and research that characterize this important area of academic and business research. Thus, it will be a critical reference for scholars and students of regulatory economics, policy and finance and researchers and administrators of the telecom industry.
Author: Harald Gruber
Publisher:
ISBN:
Category : Barriers to entry (Industrial organization)
Languages : en
Pages : 72
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Book Description
Author: Ingo Vogelsang
Publisher: Cambridge University Press
ISBN: 110880781X
Category : Political Science
Languages : en
Pages : 94
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Book Description
Have you ever wondered how your telephone company or Internet service provider can give you access to almost all people in the world, or how electricity suppliers can compete with each other if there is only one electric supply line passing through your street? This Element deals with the economics and public regulation of such network industries. It puts particular emphasis on the specific economic concepts used for analyzing them and on the regulatory reform movement and the compatibility of regulation and competition. Worldwide most of these industries have changed dramatically in recent years, telecommunications in particular. Network industries mostly exhibit economies of scale in production and similar economies in consumption. Both of these properties cause market power problems that often require industry-specific regulation. However, due to technological and market changes network policies have moved on from end-user regulation to wholesale regulation and in some cases to deregulation.
Author: Noel D. Uri
Publisher: Nova Publishers
ISBN: 9781594541650
Category : Business & Economics
Languages : en
Pages : 234
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Book Description
The process of formulating and implementing telecommunications policy in the United States often seems chaotic and disorganised, with overlapping responsibility and frequent conflicts among federal and state regulators, Congress, the Administration, and the Federal judiciary. There has never been a consensus on what should change and what should remain unaltered. Telecommunications policy has evolved gradually over a relatively long period of time, resulting in a cumulative major transformation. It is still tied, however, to the Communications Act of 1934. Actions have been taken that have gradually moved policy from traditional public utility regulation of a monopoly to greater reliance on market forces and encouragement of competition. The policies are an amalgam incorporating elements from a wide range of political and economic views. There is nothing endemic in this transformation process to guarantee that the resulting policies have led to greater economic efficiency or that they are better in some subjective sense than alternatives that are available. policies that have been implemented in order to evaluate their impact. An objective evaluation of the impact of a policy affords an opportunity to make adjustments to it based on the realised economic consequences. This approach to policy making can be looked upon as a learning-by-doing exercise. In this book a number of objective studies based on data from various telecommunications systems are presented. These studies discuss and evaluate policies that have been implemented. In a number of instances, the policies have been misguided. Recommendations to correct the most egregious problems are offered.
