دانلود مقاله ISI انگلیسی شماره 18091
عنوان فارسی مقاله

مشوق های سرمایه گذاری و ایجاد دسترسی به فن آوری های نوین غیر کنترل شده

کد مقاله سال انتشار مقاله انگلیسی ترجمه فارسی تعداد کلمات
18091 2012 15 صفحه PDF سفارش دهید محاسبه نشده
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عنوان انگلیسی
Incentives to invest and to give access to non-regulated new technologies
منبع

Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)

Journal : Information Economics and Policy, Volume 24, Issues 3–4, December 2012, Pages 197–211

کلمات کلیدی
فن آوری های نوین - سرمایه گذاری - روش مدارا - تنظیم دسترسی -
پیش نمایش مقاله
پیش نمایش مقاله مشوق های سرمایه گذاری و ایجاد دسترسی به فن آوری های نوین غیر کنترل شده

چکیده انگلیسی

We analyze the incentives of a vertically integrated firm, which is a regulated monopolist in the wholesale market and competes with an entrant in the retail market, to invest and to give access to a new wholesale technology. The new technology represents a non-drastic innovation that produces retail services of a higher quality than the old technology, and is left unregulated. We show that for intermediate values of the access price for the old technology, the vertically integrated firm may decide not to invest. When investment occurs, the vertically integrated firm may be induced to give access to the entrant for a low access price for the old technology. Furthermore, when both firms can invest, investment occurs under a larger set of circumstances, and it is the entrant the firm that invests in more cases. We also discuss the implications for the regulation of the old technology.

مقدمه انگلیسی

Consider an industry where a vertically integrated firm is a regulated monopolist in the wholesale market and competes with an entrant in the retail market. The vertically integrated firm can invest in a new technology for the wholesale market. The new technology is unregulated, and allows retail products of a higher quality to be supplied than those offered by the old technology. After investment, there will be two wholesale technologies of different qualities belonging to the same entity on the market. One will be regulated; the other will not. This scenario raises several policy questions regarding the incentives for the vertically integrated firm: (i) to invest in the new technology, and (ii) to allow the retail market entrant access to the new technology. Regarding the first issue, does the vertically integrated firm have more incentives to invest if the access price for the old technology is high or low? In some circumstances, only the vertically integrated firm can invest in the new technology, but in others, perhaps due to public policies, both firms can. If both firms can invest, will investment occur under a larger set of circumstances than when only the vertically integrated firm can invest? Regarding the second issue, will the vertically integrated firm voluntarily give access to the entrant, or will the industry be monopolized if the new technology is left unregulated? The vertically integrated firm has conflicting incentives with respect to giving access to the entrant. Granting access allows the entrant to sell a higher quality product. This, on the one hand, reduces the vertically integrated firm’s retail profits, but, on the other hand, increases the vertically integrated firm’s wholesale profits. This discussion is motivated by several examples in the telecommunications industry, such as the deployment of fourth generation mobile networks and next generation fixed networks (NGNs), as well as by some theoretical support advocating the abstention from regulatory intervention. Several mobile telecommunications firms have announced plans to deploy fourth generation mobile telecommunications networks. These networks enable broadband access to the internet at gigabit speeds. In several countries, sectoral regulators forced mobile network operators to provide wholesale reference offers for retail entrants, known as mobile virtual network operators (MVNOs), for second and third generation mobile telecommunications networks. In addition, there is an ongoing discussion on whether mobile network operators will voluntarily give MVNOs access to their new networks, or if wholesale reference offers for MVNOs should be extended to fourth generation mobile networks.1 Many telecommunications firms have also announced plans to invest in NGNs, which are multi-service infrastructures for audio, video, and data services. To give firms the right incentives to invest, and to encourage efficient use of these infrastructures, sectoral regulators must set an adequate regulatory framework for these new telecommunications networks. The forbearance approach is one of the regulatory approaches that has been adopted. 2 This approach consists of the abstention, permanent or temporary, from regulatory intervention. The forbearance approach was followed, for instance, in the US, where it was argued that cable television and telecommunications firms, incumbents and entrants, are on an equal footing to deploy their own networks, and that competition among them to do so is welcomed. Telecommunications firms, like Verizon, are deploying NGNs, but they are only obliged to offer to entrants wholesale services equivalent to those they already offered through the old network. The forbearance approach was criticized in some jurisdictions on the basis that, when there are no alternative networks, it could allow the telecommunications incumbent to re-monopolise the market. In Germany, the sectoral regulator, BNetzA, granted a regulatory moratorium to the NGN of the telecommunications incumbent, Deutsche Telekom, in 2007. However, the European Commission objected, and forced the cancelation of the regulatory moratorium. 3 The Commission argued that the existing ex-ante regulation had to be extended also to this new network, since the lack of competition in the German market could lead to the re-emergence of monopoly. The forbearance approach has also been backed up in the economics theory literature, where it is presented as a solution to the regulator’s commitment problem. Before the network is deployed, it is socially optimal to set a high access price to promote investment. However, once the network is deployed, it is socially optimal to set the access price to stimulate competition in the retail market. If the regulator is unable to commit to a policy, the incumbent anticipates that it will be expropriated from the incremental profit of its investment, and reduces investment. Gans and King (2004) argue that if the regulator cannot commit to a specific access price, investing firms should apply for a regulatory moratorium that would grant them a period of time during which they would not be subject to access regulation. To analyze these problems, we developed a model that extends Biglaiser and DeGraba (2001), to allow the coexistence of two technologies: (i) an old and regulated technology, and (ii) a new and unregulated technology.4 Since we want to focus on the analysis of the incentives of the vertically integrated firm to invest and to give access to a new wholesale technology, we assume that: (i) the access price for the old technology is set, exogenously, by the regulator, and (ii) the new technology is unregulated. When the new technology represents a non-drastic innovation, i.e. when the entrant, using the old technology at a low enough access price, can compete against the vertically integrated firm, using the new technology, our results are as follows. When only the vertically integrated firm can invest in the new technology, we show that for intermediate values of the access price for the old technology the vertically integrated firm may decide not to invest. Regarding the access decision, we show that given a low access price for the old technology, the vertically integrated firm cannot foreclose the market by denying access to the new technology, and hence it voluntarily gives access to the entrant, leading to a duopoly with the new technology. On the contrary, when the access price for the old technology is high, i.e. when the entrant, using the old technology, cannot compete against the vertically integrated firm, using the new technology, the vertically integrated firm takes advantage of this and denies the entrant access to the new technology, becoming a monopolist in the retail market. We also consider the case where both the vertically integrated firm and the entrant can invest in the new technology. We show that when the investment cost is low both firms invest, and when the investment cost is high only one of them invests. Furthermore, the entrant invests under a larger set of circumstances than the incumbent. Compared to the case where only the vertically integrated firm can invest, investment occurs under a larger set of circumstances when both firms can invest. Typically, the access price for the old technology is set by the regulator in line with the conditions of the industry, i.e. the access price is endogenous. Hence, for completeness, we extend our analysis to derive the optimal access price for the old technology under the scenario of an unregulated new technology. It is emphasized that our intention is not to derive the socially optimal regulatory policy towards the new technology, or to determine when no-regulation of the new technology would be socially optimal. When only the vertically integrated firm can invest in the new technology the regulator sets the access price for the old technology at a value that leads to investment. Furthermore, if the quality improvement enabled by the new technology is small, the regulator sets the access price for the old technology at marginal cost, inducing a duopoly in the new technology. If the quality improvement enabled by the new technology is large, a monopoly is socially preferable to a duopoly. Hence, the regulator sets a high access price for the old technology. This is due to the double-marginalization effect present in the duopoly case, which is enhanced by the increment in quality enabled by the new technology. The possibility of, under certain circumstances, a monopoly being socially preferable to a duopoly should be interpreted with care. Such a result is more likely when: (i) the entrant does not attract new consumers to the market, (ii) the entrant is less efficient than the incumbent, or (iii) the monopoly involves a small deadweight loss. Our assumptions on market coverage and on the structure of retail and wholesale tariffs favor this possibility. When both the vertically integrated firm and the entrant can invest in the new technology, the regulator cannot influence the equilibrium of the game. Additionally, if the investment cost is low, the possibility of the entrant also investing, instead of just the vertically integrated firm, has an ambiguous effect on welfare, due to the trade-off between the elimination of double-marginalization and the duplication of the investment cost. If the investment cost is high, the possibility of the entrant also investing never increases welfare. When the innovation is drastic, concern that the industry might be monopolized by the vertically integrated firm is justified. Since the entrant, using the old technology, cannot compete against the vertically integrated firm, using the new technology, even when the access price for the old technology is set at marginal cost, by denying access to the new technology, the vertically integrated firm can expel the entrant from the industry. In this case, a regulator whose only instrument is the access price to the old network, cannot influence the structure of the market. For more details of this case see Brito et al. (2011). The remainder of the article is organized as follows. In Section 2, we explain the article’s place in the literature. In Section 3, we describe the model. In Section 4, we analyze the case where only the vertically integrated firm can invest. In Section 5, we analyze the case where both the vertically integrated firm and the entrant can invest. Section 6 presents an extension to the model where the regulation of the old technology is endogenously determined. Finally, in Section 7, we draw our conclusion. All proofs are in the Appendix.

نتیجه گیری انگلیسی

In this article, we analyzed the incentives of a vertically integrated firm, which is a regulated monopolist in the wholesale market and competes with an entrant in the retail market: (i) to invest in a new unregulated technology, and (ii) to give access to the entrant to the new technology. We adapted the model in Biglaiser and DeGraba (2001) to account for the co-existence of two technologies and, given our assumptions, we concluded that for intermediate values of the regulated access price to the old technology, the vertically integrated firm may find it unprofitable to invest. Additionally, in the case of investment, if the regulated access price to the old technology is such that the entrant can compete against the vertically integrated firm, we showed that the latter always prefers to give access to the new technology. The policy implications for the regulation of the old technology are as follows. If the innovation is non-drastic, concerns about the industry being monopolized is not justified. By setting a low enough access price for the old technology, the regulator can ensure that the entrant, using the old technology, can compete against the vertically integrated firm, using the new technology. Since the vertically integrated firm cannot avoid competition from the entrant, it grants access to the new technology, although at a higher access price. If the quality improvement enabled by the new technology is low, a duopoly with the new technology is socially optimal, whereas if the quality improvement enabled by the new technology is high, a monopoly with the new technology is socially optimal. In either case, investment is always socially optimal. Despite investment implying a non-regulated access price above marginal cost, the alternative of a duopoly on the old technology would only be possible for intermediate values of the access price for the old technology and thus would also involve some distortion, leading to lower welfare. When both the vertically integrated firm and the entrant can invest in the deployment of the new technology, investment occurs for a larger set of access prices than when only the vertically integrated firm can invest, and the entrant is the firm that invests in a larger set of circumstances. Even so, and given that when the vertically integrated firm alone can invest the regulator always sets the access price to induce investment, if the investment cost is low the possibility of both firms investing has an ambiguous effect on welfare, given the trade-off between double-marginalization and the duplication of investment costs. If the investment cost is high, and thus only one firm invests in either case, welfare is at best unchanged with the possibility of both firms investing since the regulator loses the capacity to influence the structure of the market through the access price. If the innovation is drastic, the entrant, using the old technology, can never compete against the vertically integrated firm, using the new technology. By denying access to the new technology, the vertically integrated firm induces the entrant to leave the industry. In this case, a regulator, constrained to set the access price to the old network, plays no role in the determination of the market structure.

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