nep-com New Economics Papers
on Industrial Competition
Issue of 2013‒04‒27
25 papers chosen by
Russell Pittman
US Government

  1. Irreversible Investment under Competition with a Markov Switching Regime By Makoto Goto; Katsumasa Nishide; Ryuta Takashima
  2. Optimal production channel for private labels: Too much or too little innovation? By Claire Chambolle; Clémence Christin; Guy Meunier
  3. The US and Ireland Approach to Sentencing in Cartel Cases: the Citroen Case By Gorecki, Paul K.; Maxwell, Sarah
  4. ASEAN Regional Cooperation on Competition Policy By Cassey Lee; Yoshifumi Fukunaga
  5. Concentration Measures as an element in testing the structure-conduct-performance paradigm By Johann du Pisanie
  6. Optimal patent length and patent breadth in an R&D driven market with evolving consumer preferences: An evolutionary multi-agent based modelling approach By Cevikarslan, Salih
  7. Innovation diffusion in networks: the microeconomics of percolation By Paolo Zeppini; Koen Frenken; Luis R. Izquierdo
  8. The Shapley value as a guide to FRAND licensing agreements. By Pierre Dehez; Sophie Poukens
  9. Hospital Mergers: A Spatial Competition Approach By Kurt R. Brekke; Luigi Siciliani; Odd Rune Straume
  10. Do pay-as-bid auctions favor collusion? - Evidence from Germany’s market for reserve power By Sven Heim; Georg Götz
  11. The Impact of Ownership Unbundling on Cost Efficiency: Empirical Evidence from the New Zealand Electricity Distribution Sector By Filippini, Massimo; Wetzel, Heike
  12. On the evolution of monopoly pricing in Internet-assisted search markets By Aurora García-Gallego; Nikolaos Georgantzis; Ainhoa Jaramillo-Gutiérrez; Pedro Pereira; J. Carlos Pernías-Cerrillo
  13. An analysis of Google entry and positioning in Unified Communications for the business customers market By Vialle, Pierr
  14. Exploring mobile pricing strategies and innovations in the Thai mobile communications market By Srinuan, Chalita; Srinuan, Pratompong; Bohlin, Erik
  15. On co-opetition between mobile network operators: Why and how competitors cooperate By Markendahl, Jan; Mölleryd, Bengt G.
  16. Mobile wholesale and retail price interplay: The somewhat contrary case of South Africa in Africa By Stork, Christoph; Gillwald, Alison
  17. Mobile service platform competition By Nikou, Shahrokh; Bouwman, Harry
  18. An empirical study of unbundling regulation on broadband adoption in OECD countries: What can we learn for future regulation? By Kongaut, Chatchai; Bohlin, Erik
  19. The effect of on-net By Muck, Johannes
  20. Access regulation and geographic deployment of a new generation infrastructure By Flacher, David; Jennequin, Hugues
  21. A study on the ex-post regulation within the content ecosystem in Korea By Hyenyoung, Yoon
  22. Re-inventing the telecommunications industry By van den Dam, Rob
  23. Access regulation in the next generation access network environment: A comparative study of Hong Kong and Singapore from the transaction cost economics perspectives By Ho, Au Man
  24. Productivity grwoth and efficiency changes in the Mongolian mobile communications industry By Byambaakhuu, Badamasuren; Kwon, Youngsun; Rho, Jaejeung
  25. The role of cable TV operators as a facility based competitor in the local broadband market: A case study from three competitive areas in Japan By Yonetani, Nami; Sugaya, Minoru

  1. By: Makoto Goto (Graduate School of Economics and Business Administration, Hokkaido University); Katsumasa Nishide (Department of Economics, Yokohama National University); Ryuta Takashima (Faculty of Science and Technology, Tokyo University of Science)
    Abstract: In this paper, we study an investment problem in which two asymmetric firms face competition and the regime characterizing economic conditions follows Markov switching. We derive the value functions and investment thresholds of a leader and a follower. One of the interesting results is that in contrast to the case of no regime switching, even if the current market size is small, both advantaged and disadvantaged firms have an incentive to become a leader in some parameter settings.
    Keywords: Real options; Competition; Timing game; Regime switch
    JEL: C73 D43 D81 E32
    Date: 2013–04
  2. By: Claire Chambolle (INRA, UR1303 ALISS and Department of Economics Ecole Polytechnique, France); Clémence Christin (Normandie University, Caen, Faculty of Economics and Business Administration - CREM-CNRS UMR6211, France); Guy Meunier (INRA,UR1303 ALISS and Department of Economics Ecole Polytechnique, France)
    Abstract: We analyze the impact of the private label production channel on innovation. A retailer may either choose a competitive fringe or rely on a brand manufacturer to produce its private label. The trade-o between the two channels is a choice between too much or too little innovation, i.e. quality investment, on the private label. On the one hand, when choosing the competitive fringe, the retailer over-invests to increase its buyer power. On the other hand, when the brand manufacturer is selected, a hold-up e ect leads to under-investment. In addition, selecting the brand manufacturer may create economies of scale that spur innovation.
    Keywords: Private label, vertical relations, buyer power, innovation
    JEL: L14 L15 L42
    Date: 2013–04
  3. By: Gorecki, Paul K.; Maxwell, Sarah
    Abstract: Developing a coherent evidence based methodology for determining sanctions in cartel cases is vitally important for robust cartel enforcement in Ireland. This methodology should take into account aggravating/mitigating factors for individuals as well as culpability indicators for firms, while at the same time taking cognisance of the economic damage caused by cartels to consumers. Irish Courts, despite presiding over 33 convictions on indictment for cartel offences stretching back over six years have, as yet, to develop such a methodology. While the Duffy judgment, the only reported judgment on sentencing of a cartel member, the Court provides some guidance on sentencing. It states, for example, that cartels are bad and pernicious and that jail sentences are to be expected in future cartel cases. This is not a coherent sentencing methodology. The Sentencing Guidelines, developed by the US Sentencing Commission, provide such a methodology, while at the same allowing for judicial discretion. Applying that methodology to the facts of the Citroen cartel case in Ireland, in which 14 individuals and firms were convicted on indictment, suggests that the current approach to sentencing in Ireland by the Courts results in fines and jail sentences that are too low. This encourages rather than discourages cartel activity which raises prices for consumers and thus damages consumer welfare.
    Keywords: Individuals/Ireland/US
    Date: 2013–01
  4. By: Cassey Lee (University of Wollongong, Australia); Yoshifumi Fukunaga (Economic Research Institute for ASEAN and East Asia)
    Abstract: ASEAN member states (AMSs) intend to establish the ASEAN Community by 2015. A key component of this goal is the formation of the ASEAN Economic Community (AEC). The AEC Blueprint was initiated to facilitate and monitor the implementation of the AEC during the period 2008-2015. Competition policy will play an important role in the achievement of the AEC. There has been significant progress in regional cooperation to achieve the competition policy targets listed in the AEC Blueprint. Even though only half of AMSs have implemented competition laws, regional cooperation in this area has been fairly strong. The main emphasis has been on publishing regional guidelines and a handbook on competition policy in ASEAN as well as capacity building activities. There needs to be a renewed impetus to implement national competition laws in AMSs that have not done so. There also remain significant opportunities for enforcement cooperation and pooling of resources for capacity building in competition policy in the region.
    Keywords: Competition Policy, Competition Law, ASEAN, Regional Integration, ASEAN Economic Community, AEC Blueprint
    JEL: F15 L40 L50
    Date: 2013–04
  5. By: Johann du Pisanie
    Abstract: The original structure-conduct-performance (SCP) paradigm, according to which market structure determines market conduct and market conduct determines market performance, underlies numerous competition policies. Since its development almost a century ago, the paradigm has been heavily criticised and numerous efforts have been made to test it by correlating measures of seller concentration with measures of market performance. The reliability of seller concentration measures that are frequently used, particularly in South Africa, was tested against the Hannah and Kay criteria, using hypothetical numbers of sellers and market shares. The premise is that a concentration measure must be reliable in the sense that it should lead to a correct conclusion when the relevant concentration curves do NOT cross. The following absolute concentration measures were found to meet the criteria: the Herfindahl-Hirschman index (HHI), the other Hannah and Kay indices [HKI(α)], the Rosenbluth index (RI), the numbers equivalent of the Hannah and Kay indices [HKIne(α)] and the entropy coefficient (EC). The discrete measures, concentration ratios (CRX) and the occupancy count (CRX%), do not always meet the criteria, nor do the relative concentration measures or measures of inequality, namely the Gini coefficient (GC), the variance of logarithms of market shares (VL) and the relative entropy coefficient (REC). The Horvath index (HI), an absolute concentration measure, does not always meet the criteria. Studies that employed the unreliable measures should be disregarded or reworked and students should be forewarned against the use of such measures.
    Date: 2013
  6. By: Cevikarslan, Salih (UNU-MERIT, and SBE, Maastricht University)
    Abstract: The aims of this paper are twofold. The first is to analyse the interaction between research and development (R&D) activities of firms and heterogeneous consumer preferences in structuring the evolution of an industry. The second is to explore the effects of patent life and patent breadth on market outcomes. To answer these research questions, an evolutionary, multi-agent based, sector-level cumulative innovation model is designed. The model addresses supply and demand sides of the market simultaneously with the co-evolution of heterogeneous consumer preferences, heterogeneous firm knowledge bases and technology levels at the micro level. In line with the evolutionary modelling tradition, we have a search algorithm-innovation and imitation of products by firms - a selection of algorithm-revealed preferences of the consumers - and a population of objects in which variation is expressed and on which selection operates: namely, firms (Windrum, 2004). Firms compete on quality and price of their products in an oligopolistic market whereas consumers, constrained by their computational limits, act to maximize their utility with their product choices in a boundedly rational way. There is continuous firm entry and exit depending on the competitive performance of the firms.
    Keywords: Patents, industrial dynamics, evolutionary economics, agent-based modelling
    JEL: B52 L11 O34
    Date: 2013
  7. By: Paolo Zeppini; Koen Frenken; Luis R. Izquierdo
    Abstract: We implement a diffusion model for an innovative product in a market with a structure of social relationships. Diffusion is described with a percolation approach in the price space. Percolation shows a phase transition from a diffusion to a no-diffusion regime. This has strong implications for market demand and pricing. We study the effect of network structure on market diffusion efficiency by considering a number of cases, such as one-dimensional and two-dimensional lattices, small worlds, Poisson networks and Scale-free networks. We consider two measures of diffusion efficiency: the size of diffusion and the diffusion time-length. We find that network connectivity “spreading” is the most important factor for the size of diffusion. Clustering is ineffective. This means that societies with higher dimensionality are better markets for diffusion. This result is most evident for the size of diffusion, while a short average path-length is more important for the speed of diffusion. Endogenous learning curves shift the percolation threshold to higher prices, and constitute an endogenous mechanism of price discrimination. The best market strategy of innovation diffusion is to start with high price and allow for a learning curve.
    Keywords: critical transition, demand, learning curves, market efficiency, social networks
    JEL: C63 D42 O33
    Date: 2013–02
  8. By: Pierre Dehez; Sophie Poukens
    Abstract: We consider the problem of specifying Fair, Reasonable And Non-Discriminatory agreements faced by standard-setting organizations. Along with Layne-Farrar, Padilla and Schmalensee (2007), we model the problem as a cooperative game with transferable utility, allowing for patents to be weak in the sense that they have substitutes. Assuming that a value has been assigned to weak patents, we obtain a formula for the Shapley value that gives an insight into what FRAND agreements should look like.
    Keywords: patent licensing, Shapley value, core.
    Date: 2013
  9. By: Kurt R. Brekke (Department of Economics and Centre and Health Economics Bergen, Norwegian School of Economics); Luigi Siciliani (Department of Economics and Centre for Health Economics, University of York, Heslington); Odd Rune Straume (Department of Economics, University of Minho)
    Abstract: Using a spatial competition framework with three ex ante identical hospitals, we study the effects of a hospital merger on quality, price and welfare. The merging hospitals always reduce quality, but the non-merging hospital responds by reducing quality if prices are fixed and increasing quality if not. The merging hospitals increase prices if demand responsiveness to quality is sufficiently low, whereas the non-merging hospital always increases its price. If prices are endogenous, a merger leads to higher average prices and quality in the market. A merger is harmful for total patient utility but can improve social welfare under price competition.
    Keywords: Hospital mergers; Spatial Competition; Antitrust
    JEL: I11 I18 L13 L44
    Date: 2013
  10. By: Sven Heim (ZEW, University of Giessen); Georg Götz (University of Giessen)
    Abstract: We analyze a drastic price increase in the German auction market for reserve power, which did not appear to be driven by increased costs. Studying the market structure and individual bidding strategies, we find evidence for collusive behavior in an environment with repeated auctions, pivotal suppliers and inelastic demand. The price increase can be traced back to an abuse of the auction’s pay-as-bid mechanism by the two largest firms. In contrast to theoretical findings, we show that pay-as-bid auctions do not necessarily reduce incentives for strategic capacity withholding and collusive behavior, but can even increase them.
    Keywords: Auctions, Collusion, Market Power, Energy Markets, Reserve Power, Balancing Power
    JEL: D43 D44 L11 L13
    Date: 2013
  11. By: Filippini, Massimo (Energiewirtschaftliches Institut an der Universitaet zu Koeln); Wetzel, Heike (Energiewirtschaftliches Institut an der Universitaet zu Koeln)
    Abstract: Several countries around the world have introduced reforms to the electric power sector. One important element of these reforms is the introduction of an unbundling process, i.e., the separation of the competitive activities of supply and production from the monopole activity of transmission and distribution of electricity. There are several forms of unbundling: functional, legal and ownership. New Zealand, for instance, adopted an ownership unbundling in 1998. As discussed in the literature, ownership unbundling produces benefits and costs. One of the benefits may be an improvement in the level of the productive efficiency of the companies due to the use of the inputs in just one activity and a greater level of transparency for the regulator. This paper analyzes the cost efficiency of 28 electricity distribution companies in New Zealand for the period between 1996 and 2011. Using a stochastic frontier panel data model, a total cost function and a variable cost function are estimated in order to evaluate the impact of ownership unbundling on the level of cost efficiency. The results indicate that ownership separation of electricity generation and retail operations from the distribution network has a positive effect on the cost efficiency of distribution companies in New Zealand. The estimated effect of ownership separation suggests a positive average one-off shift of 23 percent in the level of cost efficiency in the shortrun and 15 percent in the long-run.
    Keywords: Electricity distribution; Ownership separation; Cost efficiency; Total cost function; Variable cost function; Stochastic frontier analysis
    JEL: D24 L51 L94
    Date: 2013–02–10
  12. By: Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzis (GLOBE & Economics Department, University of Granada, Spain; LEE & Economics Department, Universitat Jaume I, Castellón-Spain); Ainhoa Jaramillo-Gutiérrez (EriCes & Dpt. of Applied Economics, University of Valencia, Spain); Pedro Pereira (Autoridade da Concorrência and CEFAGE-UE, U. of Evora, Portugal); J. Carlos Pernías-Cerrillo (Economics Department, Universitat Jaume I, Castellón, Spain)
    Abstract: We study the evolution of prices in markets assisted by price-comparison engines. We use laboratory data obtained under two industry sizes and two conditions concerning the sample (complete, incomplete) of prices available to informed consumers. Distributions are typically bimodal. One of the two modes, corresponding to monopoly prices, tends to increasingly attract prices over time. The second one, corresponding to interior prices, presents a decreasing trend. Monopoly pricing can be used as an insurance against more competitive (but riskier) behavior. In fact, subjects earning low profits due to interior pricing in the past are more likely to choose monopoly pricing.
    Keywords: Internet Economics, price-comparison search engines, mixed strategy equilibria, experimental economics
    JEL: D0 D2 L1 L4
    Date: 2013
  13. By: Vialle, Pierr
    Abstract: In this paper, we focus on the telecommunications/computing convergence in business market. While the telecommunications/audio-visual convergence has been extensively analysed from an academic perspective, the telecommunications/computing convergence has drawn less attention. This is also the case in general of the business market as opposed to the consumer market. The business communications market has been deeply transformed by technological and product convergence, due to the progressive substitution of traditional TDM-based voice products and services by ToIP (Telephony over IP) based products and services. The adoption of IP and the management of voice applications in the same way as data application has given rise to convergence offerings under the name of Unified Communications, and allowed the entry of data communications vendors, such as Cisco, in a market initially dominated by TDM-based product vendors. The increasing dissociation between hardware and software and the virtualisation of services have induced the entry of new players relying on their initial position in software and web services, among which Microsoft and Google. Firstly, we present the Unified Communications market and products. Secondly, we analyse how Google's has entered this market and built its product portfolio through acquisitions, in order to identify the dimensions of line extensions and the importance of extensions. Thirdly, it leads us to discuss this strategy as an extension of its two-sided market strategy. This strategy is different from its traditional two-sided market strategy, as it aims at generating other revenues than only advertising. It is also not really a two-sided market, but rather a product versioning relying on direct network externalities. This study is based on documentary research, in particular the systematic analysis of Google's press releases, and on information collected from interviews with market incumbents. --
    Keywords: Convergence,resources,two-sided market,unified communications,business,communications,Google
    Date: 2012
  14. By: Srinuan, Chalita; Srinuan, Pratompong; Bohlin, Erik
    Abstract: This paper aims to explore the price plans offered by Thai mobile operators and analyse the role of demand characteristics in the development of new price plans. The paper also shows how demand affects a firm's degree of innovativeness in terms of the number of new price plans. The empirical qualitative analysis is based on an original data set from several secondary data sources and includes all the price plans offered in the history of the Thai mobile communications market between 2002 and 2010. The results show that mobile operators have introduced several innovative price plans to attract and retain their consumers. Although a greater number of price plans can increase competition among operators, some have complex combinations that may lead to confusion for consumers. A price comparison programme should therefore be implemented by the telecom regulator to ensure that consumers receive correct and complete information about the price plans. Most studies, by far, have not extensively discussed this mobile communications market in detail and the effect of innovation on competition between firms in the mobile communications industry, in particular the development of innovation in developing countries. --
    Keywords: pricing strategies,mobile communications market,innovation,Thailand
    Date: 2012
  15. By: Markendahl, Jan; Mölleryd, Bengt G.
    Abstract: This paper address issues about cooperation among and competition between mobile network operators. The starting point is to examine why and how operators share infrastructure for mobile communication services, so called network sharing. The paper analyzes drivers, benefits and obstacles of network cooperation. We also analyze how roles and responsibilities are distributed for the network related functions while concurrently operators compete for customers and have separate functionality for service provisioning, marketing, customer relation management, charging and billing. Next, we analyze how network sharing as such and strategies for network sharing have changed in Sweden from the year 2000 when the 3G licenses were awarded and up to the year 2010. Moreover, network sharing in Sweden is compared with India where the market situation is different, as the number of operators is four times more and the cooperation is organized in another way, with separate tower companies, which provides base stations sites where operators are tenants. Finally, we compare the network sharing cases with how mobile operators organize cooperation for mobile payments services. From our empirical data we can identify four different types of co-opetition among mobile operators. 1. A co-operative spirit with focus on working practices and/or principles that will facilitate the common use of resources or solutions. 2. Infrastructure cooperation through a third party, e.g. a tower company or a SMS aggregator with the main objective to reduce costs or to provide a common solution. The operators have agreements with a third party but not with each other. 3. Infrastructure cooperation through a joint venture that is responsible for network deployment and operation. The driver is to achieve cost-savings. The operators have their own service provisioning, billing, customer relations management and compete for end-users. 4. Service and infrastructure cooperation through a joint venture that is fully responsible for providing the end-user service, in our case mobile payments. The main driver is to offer a payment solution common for all operators in order to complement or compete with solutions provided by banks or payment service providers. --
    Date: 2012
  16. By: Stork, Christoph; Gillwald, Alison
    Abstract: This paper analyses the link between termination rate reductions and retail prices. It draws on in-depth case studies of South Africa, Namibia and Kenya where regulators have reduced termination rates towards the cost of an efficient operator. To varying degrees these have all led to lower retail prices and a significant market expansion. While both Namibia and Kenya, experienced significant retail price reduction following substantial termination rate reductions, the case of South Africa demonstrates that termination rate reductions are not automatically passed through to consumers. In South Africa only the second reduction in March 2012 allowed smaller operators to reduce their off-net prices to a level could tempt subscribers from dominant operators to switch. The case studies confirm that retail prices do not go up in response to termination rates going down, in CPNP (calling-party's-network-pays) markets as contended by dominant mobile operators. This is also in contrast to a body of academic literature stating that termination rates and mobile retail prices constitute a two-sided market and that termination rate reductions will lead to a so called waterbed effect. This study draws on a database of all prepaid products available in 46 African countries which were collected monthly for the period January 2011 to June 2012. The OECD price basket methodology is used to compare prices between countries and between operators. In-depth face-to-face interviews on termination rate regulations were also held with regulators in Kenya, Namibia and South Africa. The analysis is further supplemented with an analysis of audited financial statements of dominant operators in each market, namely Vodacom South Africa, MTN South Africa, Telkom South Africa, MTC2 in Namibia, and Safaricom in Kenya. --
    Keywords: Mobile termination rates,retail prices,Waterbed effect,two-sided markets,South Africa,Kenya,Namibia
    Date: 2012
  17. By: Nikou, Shahrokh; Bouwman, Harry
    Abstract: Mobile service platforms are becoming particularly important as play a significant role in consumers' decisions to accept, adopt and use mobile services and applications. Literature on mobile service platforms focuses mainly on strategic issues in managing multi-sided platforms and economic issues of two sided markets, still literature is highly conceptual and empirical research on the awareness and preferences of consumers is lacking. Yet, there is a lack of empirical research on platforms developed by mobile network operators. By making use of conjoint analysis, 62 Finnish respondents participated in an empirical study. The conjoint analysis results show that application costs and type of operating system are the most important criteria to make a decision and the provider of the service platform is not of the concern. However, consumers value issues such as security and privacy arrangement which are often guaranteed by network operators. Our findings have three suggestions to mobile network operators: (1), they settle for becoming a bit-pipe provider, (2), open their platforms, and (3), let other market competitors such as Apple, Google, Facebook be responsible for providing mobile services and applications. --
    Keywords: Mobile Service Platforms,Device Manufacturers,Service Provide-Centric Platform,Operator-Centric Platform,Application Cost
    Date: 2012
  18. By: Kongaut, Chatchai; Bohlin, Erik
    Abstract: Broadband adoption is considered one of the drivers of both economic and social development. Local loop unbundling (LLU) regulation is one of the main strategies to open access to an incumbent's bottleneck network in order to soften its monopoly power and encourage competition in the digital subscriber line (DSL) broadband market. Many studies, however, suggest that LLU regulation can slow down new infrastructure investment. Fibre optic technology is also increasingly becoming an option for the next generation network (NGN). This development is turning out to be the new challenge for regulators, incumbents and new entrants. With the similarities to DSL broadband and the move towards technology neutrality, regulators may also be able to adjust their future next generation access (NGA) regulation by learning from the strengths and weaknesses of LLU regulation. This paper therefore aims to analyse the impacts of unbundling policy on various aspects of broadband adoption that can be presented as consumer welfare. The possible adaptation to NGA regulation is also discussed in this paper. The empirical results of this study show that LLU regulation is one of the strategies to increase broadband adoption, particularly in the countries that have difficulty encouraging infrastructure competition. Nevertheless, several studies suggest that unbundling regulation reduces the incumbent's incentive to invest. With the dramatic growth in technologies, the main policy to increase broadband penetration should be competition between them, while unbundling regulation can be implemented carefully and differently in each country that has inefficiency that is harmful to consumers in its market from a monopoly incumbent. The decision to apply access regulation from DSL to fibre technology is therefore crucial to whether the regulator regulates the NGN market from the early stage of investment or waits for the NGN market to become more mature. Alternatively, the regulator can opt not to intervene in the market for a certain period of time, as access regulation can delay the growth in infrastructure investment. --
    Keywords: Local loop unbundling,broadband adoption,access regulation
    Date: 2012
  19. By: Muck, Johannes
    Abstract: I explore the effects of on-net / off-net differentiation on network sizes in mobile telecommunications when both rational and non-rational consumers coexist in the market. In particular, three different types of consumers are modeled: (1) fully informed rational (FIR) consumers who are perfectly informed about the true market shares of all networks and choose the network with the lowest expected cost of a call; (2) partly informed rational (PIR) consumers who only observe market shares within a circular sensing field and choose the network with the lowest expected cost of a call based on these observed market shares; and (3) non-rational (NR) consumers who choose the network with the highest market share among their immediate neighbors. Using an agent-based simulation approach and by systematical variation of four key parameters of the model, three key results emerge. First, if the share of FIR consumers is too high, all consumers will eventually join the initially larger network A. Second, if their share in the population is sufficiently large, NR consumers can prevent the growth of clusters of consumers subscribed to network B. Third, if the share of PIR consumers is high, clusters of consumers subscribed to network B can grow, thereby increasing network B's market share, provided that the radius of their circular sensing field is small enough for the cluster size. --
    Date: 2012
  20. By: Flacher, David; Jennequin, Hugues
    Abstract: This article addresses the impact of regulatory policy on levels of infrastructure deployment and derived welfare in the telecommunications sector. The model considers two potentially coexisting and partially competing techniques (the old ADSL - Asymmetric Digital Subscriber Line - technique) - and the new FTTH - Fibre To The Home - one). Competition is supposed to be high on the ADSL market because of already existing regulation. We assume that two types of operators are competing in order to provide FTTH services: those that build and operate the new infrastructures (OPf1) and those that just buy access to them (OPf2). In our model, the level of investment is decided at stage 1 and the access price is decided at stage 2. At stage 3, OPf1 and OPf2 compete à la Cournot. This common framework allows us to show that the regulation defining access price in order to maximise infrastructure deployment is strictly equivalent to the case in which no regulation applies. We also derive from the model that these two types of regulation induce higher social welfare, but lower numbers of FTTH consumers than cost-oriented access regulation. Finally, we show that the level of infrastructure deployment (as well as social welfare and number of FTTH consumers) will be at its highest if both investment and access price decisions are taken by the regulator. This suggests that the social optimum will be achieved through a call-for-tender process including deployment and access prices requirements. --
    Keywords: Access regulation,geographic deployment,network industries,telecommunications,investment.
    JEL: L43 L51 L96 R58
    Date: 2012
  21. By: Hyenyoung, Yoon
    Abstract: The fixed and mobile contents ecosystem has been recently facing a major change because the importance of contents business is emphasized by the rapid spread of smart media equipments and the accompanying deregulation of related industries leads to more intense competition. With the appearance of gigantic platform operators or network operators, market concentration takes place. Competitions between platform operators and network operators result in unfair trades, which harm both fair competition and user's benefit. Therefore, this paper examines the change of distribution structure within evolved contents ecosystem, understands the causes that harms fair competition, and offers the ex-post regulation policy that will mitigate detected problems. This paper thoroughly analyzes the cases where contents providers experienced unfair trading practices in Korea. However, we propose implications that would establish an effective set of regulations with minimum government control because a unilateral government regulation would harm the development and natural revolution. This research focuses on 1) actual conditions and categories of unfair trade practice in content ecosystem, 2) current polices and the problems of unfair trade practice, and 3) solutions of adopting possible polices that promote fair competition practice in content ecosystem. For this purpose, this study carries out panel studies of related researchers, policy makers, and industry practitioners in Korea. --
    Date: 2012
  22. By: van den Dam, Rob
    Abstract: After a decade of meteoric growth, the telecommunications industry now faces mounting challenges, leading to question whether the industry may fall victim of its own success. Dramatic forces are radically changing the telecommunications landscape, and it is not at all clear how it will evolve over the coming years. Giving the ongoing uncertainties, IBM undertook scenario envisioning, that enables the industry to assess alternative contrasting futures distinctly different from the present. The findings are built on an extensive fact base, including face-to-face executive interviews with around 130 telecom providers, over 13,000 consumers surveyed in 25 countries in both developed and developing markets, and extensive secondary research. The analysis identifies four plausible scenarios that might emerge over the coming years, based on the trajectory and interplay of two key uncertainties: future addressable market growth and industry competition/integration structure. The presentation will address: • how the industry has evolved in the last decade • the disruptive forces radically altering the telecommunications landscape • the most likely scenarios for both developed and developing markets • how advances in technology help telecom providers to prepare for the future • how telecommunications stimulate economic development and improve lifestyle for people in both mature and emerging countries --
    Date: 2012
  23. By: Ho, Au Man
    Abstract: Hong Kong and Singapore have adopted two different models in the regulation of the next generation access (NGA) networks. In Hong Kong, the government has decided that access regulation will not be applied to fibre-based access networks and its strategy will be to rely on facilities-based competition to promote investment in the NGA networks. Singapore, on the other hand, has promoted access/services-based competition over a next generation broadband infrastructure subsidised by public funding and operated on an open accessbasis. This paper applies the theories of transaction cost economics (TCE) to analyse the two different regulatory models adopted in Hong Kong and Singapore for the NGA networks. Transaction cost economics is concerned with the study of governance structures. Governance structures operate within the relationship between transacting parties for the purpose of dealing with contractual hazards. Market, firms, regulation, public franchise and public ownership are alternative governance structures operating in the NGA environment. Governance structures aim to minimise transaction costs caused by contractual hazards. --
    Date: 2012
  24. By: Byambaakhuu, Badamasuren; Kwon, Youngsun; Rho, Jaejeung
    Abstract: In the mid 1990s Mongolia has introduced competition in the telecommunications market by deregulating it and opening up its mobile communications market to foreign direct investments. Since this policy reform, mobile service penetration has grown fast, recently exceeding 100 % penetration rate and mobile communications service has become the biggest among telecommunications services in Mongolia. Latest periods of the industry have been witnessing strong competition among the mobile service providers and challenge for reaching customers in remote areas of the country. On the other hand, the mobile service providers are uncertain for efficiency of their investments and benefits from competition. Policy and regulatory departments are unaware productivity growth of the sector which is crucial for the next policy and regulatory decisions. Considering such situation, this study estimates productivity growth and efficiency changes in the mobile communications industry of Mongolia over the period of 2007-2011 using firm level data and employing a Malmquist total factor productivity index method. By determining the changes in total factor productivity (TFP) growth and its components, technical change and technical efficiency change, we find that the productivity increased about 44.7 percent during the study period or nearly 9 percent annually. Our research identifies that a scale change component played as a most significant source of the TFP growth in the market. In addition, our study reveals a fluctuation pattern of the productivity growth caused by catch-up effect and technology-change components during the study period. The results of the study indicates effectiveness of a competition policy for the mobile telecommunications market with shared telecommunications network for gaining the productivity growth which may provide some lessons for similar economies as Mongolia. --
    Keywords: Mongolian mobile communications,Total factor productivity,Malmquist TFP index.
    Date: 2012
  25. By: Yonetani, Nami; Sugaya, Minoru
    Abstract: --
    Date: 2012

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