Element contents
Series: Elements in Public Economics
The Economics and Regulation of Network Industries
Telecommunications and Beyond
Published online by Cambridge University Press: 24 September 2021
Summary
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.
Information
- Type
- Element
- Information
- Series: Elements in Public EconomicsOnline ISBN: 9781108775410Publisher: Cambridge University PressPrint publication: 04 November 2021
References
Abrardi, L., & Cambini, C. (2019). “Ultra-fast broadband investment and adoption: A survey.” Telecommunications Policy 43(3): 183–198.Google Scholar
Ahlfeldt, G., Koutroumpis, P., & Valletti, T. (2017). “Speed 2.0: Evaluating access to universal digital highways.” Journal of the European Economic Association 15: 586–625.Google Scholar
ARCEP (2019). “New code, new challenges for the Gigabit society: A French eye on the issues.” Presentation by Emmanuel Gabla at the WIK Conference, October 15, www.wik.org/fileadmin/Konferenzbeitraege/2019/Gigabit_society/Gabla_2019–10-08_Presentation-WIK_v4.pdf.Google Scholar
Areeda, P. (1989). “Essential facilities: An epithet in need of limiting principles.” Antitrust Law Review 58: 841–869.Google Scholar
Armstrong, M. (1998). “Network interconnection in telecommunications.” Economic Journal 108: 545–564.Google Scholar
Armstrong, M. (2002). “The theory of access pricing and interconnection.” In Majumdar, S., Cave, M., & Vogelsang, I. (eds.), Handbook of Telecommunications Economics, Vol. 1, North-Holland Elsevier, 295–384.Google Scholar
Armstrong, M., & Sappington, D. E. M. (2007). “Recent developments in the theory of regulation.” In Armstrong, M., & Porter, R. (eds.). Handbook of Industrial Organization, Vol. 3, Elsevier B.V.Google Scholar
Armstrong, M., Cowan, S., & Vickers, J. (1994). Regulatory reform: Economic analysis and British experience. Cambridge, MA: MIT Press.Google Scholar
Armstrong, M., Doyle, C., & Vickers, J. (1996). “The access pricing problem: A synthesis.” Journal of Industrial Economics 44: 131–150.CrossRefGoogle Scholar
Averch, H., & Johnson, L. L. (1962). “Behavior of the firm under regulatory constraint.” American Economic Review 52: 1052–1069.Google Scholar
Bacache, M., Bourreau, M., & Gaudin, G. (2014). “Dynamic entry and investment in new infrastructures: Empirical evidence from the fixed broadband industry.” Review of Industrial Organization 44: 179–209.Google Scholar
Baron, D. P., & Myerson, R. B. (1982). “Regulating a monopolist with unknown costs.” Econometrica 50: 911–930.Google Scholar
Baumol, W. J. (1983). “Some subtle issues in railroad regulation.” Journal of Transport Economics 10: 1–2.Google Scholar
Baumol, W. J., Koehn, W. F., & Willig, R. D. (1987). “How arbitrary is arbitrary, or: Towards the desired demise of full cost allocation.” Public Utilities Fortnightly 120(5): 16–21.Google Scholar
Belleflamme, P., & Peitz, M. (2015). Industrial Organization: Market and Strategies. 2nd ed., Cambridge, UK: Cambridge University Press.Google Scholar
Bernier, L., Florio, M., & Bance, P. (eds.) (2020). The Routledge Handbook of State-Owned Enterprises. London: Routledge.CrossRefGoogle Scholar
Bertschek, I., Briglauer, W., Hüschelrath, K., Kauf, B., & Niebel, T. (2016). “The economic impacts of broadband internet: A survey.” Review of Network Economics 14: 201–227.Google Scholar
Blackmon, B.G. (1992). “The incremental surplus subsidy and rate-of-return regulation.” Journal of Regulatory Economics 4: 187–196.Google Scholar
Bose, A., Pal, D., & Sappington, D. E. M. (2017). “Pricing to preclude sabotage in regulated industries.” International Journal of Industrial Organization 51: 162–184.CrossRefGoogle Scholar
Bourreau, M., Cambini, C., & Doğan, P. (2012). “Access pricing, competition, and incentives to migrate from “old” to “new” technology.” International Journal of Industrial Organization 30: 713–723.Google Scholar
Bourreau, M., Cambini, C., & Hoernig, S., (2018). “Cooperative investment, access, and uncertainty.” International Journal of Industrial Organization 56: 78–106.Google Scholar
Bourreau, M., Cambini, C., Hoernig, S., & Vogelsang, I. (2020a). “Co-investment, uncertainty, and opportunism: Ex-ante and ex-post remedies.” CESifo Working Paper Series 8078, CESifo Group Munich, January.Google Scholar
Bourreau, M., Cambini, C., Hoernig, S., & Vogelsang, I. (2020b). “Fibre investment and access under uncertainty: Long-term contracts, risk premia and access options.” Journal of Regulatory Economics 57(2): 105–117.Google Scholar
Bourreau, M., Grzybowski, L., & Hasbi, M. (2018). “Unbundling the incumbent and entry into fiber: Evidence from France.” CESifo Working Paper Series 7006, CESifo Group Munich.Google Scholar
Braess, D. (1969). “Über ein Paradox aus der Verkehrsplanung.” Unternehmensforschung 12: 258–268.Google Scholar
Braeutigam, R. R. (1980). “An analysis of fully distributed cost pricing in regulated utilities.” Bell Journal of Economics 11: 182–196.Google Scholar
Bresnahan, T. F., & Trajtenberg, M. (1995). “General purpose technologies ‘Engines of Growth’?” Journal of Econometrics 65: 83–108.Google Scholar
Briglauer, W. (2015). “How EU sector-specific regulations and competition affect migration from old to new communications infrastructure: Recent evidence from EU27 member states.” Journal of Regulatory Economics 48: 194–217.CrossRefGoogle Scholar
Briglauer, W., & Cambini, C. (2019). “Does regulation of basic broadband networks affect the adoption of new fiber-based broadband services?” Industrial and Corporate Change 28: 219–240.Google Scholar
Briglauer, W., & Gugler, K. (2019). “Go for gigabit? First evidence on economic benefits of (ultra-) fast broadband technologies in Europe.” Journal of Common Market Studies 57(5): 1071–1090.Google Scholar
Briglauer, W., & Vogelsang, I. (2011). “The need for a new approach to regulating fixed networks.” Telecommunications Policy 35: 102–114.Google Scholar
Briglauer, W., & Vogelsang, I. (2017). “A regulatory roadmap to incentivize investment in new high-speed broadband networks.” DigiWorld Economic Journal 106: 143–160.Google Scholar
Briglauer, W., Camarda, E. M., & Vogelsang, I. (2019). “Path dependencies versus efficiencies in regulation: Evidence from ‘old’ and ‘new’ broadband markets in the EU.” Telecommunications Policy 43(8): 101825.CrossRefGoogle Scholar
Briglauer, W, Cambini, C., and Grajek, M. (2018). “Speeding up the Internet: Regulation and investment in European fiber optic infrastructure.” International Journal of Industrial Organization 61: 613–651.Google Scholar
Briglauer, W., Frübing, S., & Vogelsang, I. (2015). “The impact of alternative public policies on the deployment of new communications infrastructure: A survey.” Review of Network Economics, 13: 227–270.Google Scholar
Brousseau, E., & Glachant, J.-M. (2012). “Regulating networks in the ‘New Economy’: Organizing competition to share information and knowledge.” In Brousseau, E., Marzouki, M., & Meadel, C. (eds). Governance, Regulations and Powers on the Internet. Cambridge: Cambridge University Press, 63–92.Google Scholar
Cambini, C., & Jiang, Y. (2009). “Broadband investment and regulation: A literature review.” Telecommunications Policy 33: 559–574.Google Scholar
Cambini, C., & Rondi, L. (2017). “Independent agencies, political interference and firm investment: Evidence from the European Union.” Economic Inquiry 55: 281–304.Google Scholar
Cave, M. (2014). “The ladder of investment in Europe, in retrospect and prospect.” Telecommunications Policy 38: 674–683.Google Scholar
Cave, M., Genakos, C., & Valletti, T. (2018). ‘The European framework for regulating telecommunications: A 25-year appraisal.” Review of Industrial Organization 55: 47–62.CrossRefGoogle Scholar
Comino, S., & Manenti, F. M. (2014). Industrial Organization of High-Technology Markets. Cheltenham, UK, and Northampton, MA: Edward Elgar.Google Scholar
Cooper, J. C., & Kovacic, W. E. (2012). “Behavioral economics: Implications for regulatory behavior.” Journal of Regulatory Economics 41: 41–58.Google Scholar
Czernich, N., Falck, O., Kretschmer, T., & Woessmann, L. (2011). “Broadband infrastructure and economic growth.” Economic Journal 121: 505–532.Google Scholar
Decker, C. (2015). Modern Economic Regulation. Cambridge, UK: Cambridge University Press.Google Scholar
Dewenter, R. & Rösch, J. (2016). “Net neutrality and the incentives (not) to exclude competitors.” Review of Economics 67: 209–229.CrossRefGoogle Scholar
Evans, L., & Garber, S. (1988). “Public utility regulators are only human: A positive theory of rational constraints.” American Economic Review 78: 444–462.Google Scholar
Evans, L., & Guthrie, G. (2012). “Price-cap regulation and the scale and timing of investment.” Rand Journal of Economics 41: 537–561.Google Scholar
Faulhaber, G.R. (1975). “Cross-subsidization: Pricing in public enterprises.” American Economic Review 65: 966–977.Google Scholar
Florio, M. (2013). Network Industries and Social Welfare. Oxford: Oxford University Press.Google Scholar
Gasmi, F., Kennet, D. M., Laffont, J.-J., & Sharkey, W. W. (2002a). Cost Proxy Models and Telecommunications Policy. Cambridge, MA, and London: MIT Press.Google Scholar
Gasmi, F., Laffont, J.-J., & Sharkey, W. W. (2002b). “The natural monopoly test reconsidered: An engineering process-based approach to empirical analysis in telecommunications.” International Journal of Industrial Organization 20: 435–459.Google Scholar
Genakos, C., & Valletti, T. (2011). “Testing the ‘waterbed’ effect in mobile telephony.” Journal of the European Economic Association 9: 1114–1142CrossRefGoogle Scholar
Genakos, C., & Valletti, T. (2015). “Evaluating a decade of mobile termination rate regulation.” The Economic Journal 125, 586: F31-F48.Google Scholar
Geradin, D., & Sidak, G.F. (2005). “European and American approaches to antitrust remedies and the institutional design of regulation in telecommunications.” In Majumdar, S., Cave, M. & Vogelsang, I. (eds.). Handbook of Telecommunications Economics, Vol.2. North-Holland Elsevier: 517–553.Google Scholar
Grajek, M., & Röller, L. H. (2012). “Regulation and investment in network industries: Evidence from European telecoms.” Journal of Law and Economics 55: 189–216.Google Scholar
Hauge, J. A., Jamison, M. A., & Prieger, J. E. (2012). “Oust the louse: Does political pressure discipline regulators?” Journal of Industrial Economics 60: 299–232.CrossRefGoogle Scholar
Hausman, J. (1997). “Valuing the effect of regulation on new services in telecommunications.” Brooking Papers on Economic Activity, Microeconomics, 1–38.Google Scholar
Hausman, J. (1998). “Taxation by telecommunications regulation.” Tax Policy and the Economy 12: 29–48.Google Scholar
Hellwig, M. (2008). “Competition policy and sector-specific regulation for network industries.” Preprints of the Max Planck Institute for Research on Collective Goods, Bonn, July.Google Scholar
Hesamzadeh, M. R., Rosellón, J., Gabriel, S. A., & Vogelsang, I. (2018). “A simple regulatory incentive mechanism applied to electricity transmission pricing and investment.” Energy Economics 75: 423–439.Google Scholar
Hoernig, S., & Vogelsang, I. (2013). “The ambivalence of two-part tariffs for bottleneck access.” In Dewenter, R., Haucap, J. & Kehder, C. (eds.). Wettbewerb und Regulierung in Medien, Politik und Märkten. Baden-Baden: Nomos, 63–80, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2176095Google Scholar
Inderst, R., & Peitz, M. (2014). “Investment under uncertainty and regulation of new access networks.” Information Economics and Policy 26: 28–41.Google Scholar
Katz, M. L., & Shapiro, C. (1985). “Network externalities, competition, and compatibility.” American Economic Review 75: 424–440.Google Scholar
Koray, S., & Saglam, I. (2005). “The need for regulating a Bayesian regulator.” Journal of Regulatory Economics 28: 21–28Google Scholar
Krämer, J., & Vogelsang, I. (2016). “Co-investments and tacit collusion in regulated network industries: Experimental evidence.” Review of Network Economics 15: 35–61.Google Scholar
Laffont, J.-J., & Tirole, J. (1986). “Using Cost Observation to Regulate Firms.” Journal of Political Economy 94(3): 614-641.Google Scholar
Laffont, J.-J., & Tirole, J. (2000). Competition in Telecommunications. Cambridge, MA: MIT Press.Google Scholar
Laffont, J.-J., & Tirole, J. (1993). A Theory of Incentives in Procurement and Regulation. Cambridge, MA: MIT Press.Google Scholar
Laffont, J.-J., Rey, P., & Tirole, J. (1998a). “Network competition: I. Overview and nondiscriminatory pricing.” Rand Journal of Economics 29: 1–37.Google Scholar
Laffont, J.-J., Rey, P., & Tirole, J. (1998b). “Network competition: II. Price discrimination.” Rand Journal of Economics 29: 38–56.Google Scholar
Lehr, W., & Sicker, D. (2018). “Communications Act 2021.” Journal of High Technology Law 18(2): 270–330.Google Scholar
Lehr, W., Clark, D. &, Bauer, S. (2019). “Regulation when platforms are layered,” 30th European Regional ITS Conference, Helsinki 2019 205193, International Telecommunications Society (ITS).Google Scholar
Liston, C. (1993). “Price-cap versus rate-of-return regulation.” Journal of Regulatory Economics 5: 25–48.Google Scholar
Littlechild, S. (1983). Regulation of British Telecommunications Profitability: A Report to the Secretary of State for Trade and Industry. London.Google Scholar
Littlechild, S. C. (2006). “Mobile termination charges: Calling party pays versus receiving party pays.” Telecommunications Policy 30: 242–277.Google Scholar
Littlechild, S. (2009). “Stipulated settlements, the consumer advocate and utility regulation in Florida.” Journal of Regulatory Economics 35: 96–109.Google Scholar
Liu, C., & Jayakar, K. (2012). “The evolution of telecommunications policy-making: Comparative analysis of China and India.” Telecommunications Policy 36: 13–28.Google Scholar
Loeb, M., & Magat, W. A. (1979). “A decentralized method for utility regulation.” Journal of Law and Economics 22: 399–404.Google Scholar
Mankiw, N. G., & Whinston, M. D. (1986). ”Free entry and social inefficiency.” Rand Journal of Economics 17: 48–58.CrossRefGoogle Scholar
Mitchell, B. M., & Vogelsang, I. (1991). Telecommunications Pricing: Theory and Practice. Cambridge, UK: Cambridge University Press.Google Scholar
Musacchio, A., & Lazzarini, S. (2014). Reinventing State Capitalism: Leviathan in Business. Cambridge, MA: Harvard University Press.Google Scholar
Nardotto, M., Valetti, T., & Verboven, F. (2015). Unbundling the incumbent: Evidence from UK broadband. Journal of the European Economic Association 13: 330–362.Google Scholar
Neumann, K.-H., & Vogelsang, I. (2013). “How to price the unbundled local loop in the transition from copper to fiber access networks?” Telecommunications Policy 37: 893–909.Google Scholar
Newbery, D. M. (2018). “What future(s) for liberalized electricity markets: Efficient, equitable, or innovative?” Energy Journal 39: 1–27.Google Scholar
Pindyck, R. S. (2007). “Mandatory unbundling and irreversible investment in telecom networks.” Review of Network Economics 6(3): 1–25.Google Scholar
Riordan, M. H., & Sappington, D. E. M. (1987). “Awarding monopoly franchises.” American Economic Review 77: 375–387.Google Scholar
Rogerson, W. (2011). “On the relationship between historic cost, forward looking cost and long run marginal cost.” Review of Network Economics 10(2).Google Scholar
Röller, L. H., & Waverman, L. (2001). “telecommunications infrastructure and economic development: A simultaneous approach.” American Economic Review 91: 909–923.Google Scholar
Rohlfs, J. (1974). “A theory of interdependent demands for telecommunications services.” Bell Journal of Economics 5: 16–37.Google Scholar
Sappington, D. E. M., & Sibley, D. S. (1988). “Regulating without cost information: The incremental surplus subsidy scheme.” International Economic Review 29: 297–306.Google Scholar
Schweppe, F. C., Caramanis, M. C., Tabors, R. B., & Bohn, R. E. (1988). Spot Pricing of Electricity. Boston: Kluwer Academic Publishing.CrossRefGoogle Scholar
Senyonga, L., & Bergland, O. (2018). “Impact of high-powered incentive regulations on efficiency and productivity growth of Norwegian electric utilities.” Energy Journal 39: 231–255.Google Scholar
Shaffer, S. (1983). “Demand-side determinants of natural monopoly.” Atlantic Economic Journal 11: 71–73.Google Scholar
Shapiro, C., & Varian, H. R. (1999). Information Rules. Cambridge, MA: Harvard Business School Press.Google Scholar
Sharkey, W. W. (1979). “A decentralized method for utility regulation: A comment.” The Journal of Law and Economics 22: 405–407.Google Scholar
Shleifer, A., (1985). “A theory of yardstick competition.” Rand Journal of Economics 16: 319–327.Google Scholar
Spulber, D. F., & Yoo, C. S. (2009). Networks in Telecommunications: Economics and Law. Cambridge, UK: Cambridge University Press.Google Scholar
Sutton, J. (1991). Sunk Costs and Market Structure: Price Competition, Advertising, and the Evolution of Concentration. Cambridge, MA: MIT Press.Google Scholar
Trillas, F. (2016). “Behavioral regulatory agencies.” Applied Economics Working Papers, 16–06.Google Scholar
Trillas, F. (2020). “Innovative behavioral regulatory agencies as second generation commitment devices.” Journal of Economic Policy Reform 23(1): 83–99.Google Scholar
Vickrey, W. (1971). “Responsive Pricing of Public Utility Services.” Bell Journal of Economics 2: 337–346.Google Scholar
Vogelsang, I. (1984). “Incentive Mechanisms Mimicking German Electric Utility Regulation.” Proceedings of the 11th EARIE Conference, Fontainebleau, August 1984, Vol. I: 87–108.Google Scholar
Vogelsang, I. (1989a). “Price cap regulation of telecommunications services: A long-run approach.” In Crew, M. A. (ed.). Deregulation and Diversification of Utilities. Boston: Kluwer Academic Publishers, 21–42.Google Scholar
Vogelsang, I. (1989b). “Two-part tariffs as regulatory constraints.” Journal of Public Economics 39: 45–66.Google Scholar
Vogelsang, I. (2002). “Incentive regulation and competition in public utility markets: A 20-year perspective.” Journal of Regulatory Economics 22: 5–28.Google Scholar
Vogelsang, I. (2006). “Electricity transmission pricing and performance-based regulation.” The Energy Journal 27: 97–126.Google Scholar
Vogelsang, I. (2015). “Will the U.S. and EU telecommunications policies converge? A survey.” Journal of Industrial and Business Economics (Economia e Politica Industriale) 42: 117–155, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2463156Google Scholar
Vogelsang, I. (2017a). “Regulatory inertia versus ICT dynamics: The case of product innovations.” Telecommunications Policy 41: 978–990.Google Scholar
Vogelsang, I. (2017b). “The role of competition and regulation in stimulating innovation – Telecommunications.” Telecommunications Policy 41: 802–812.Google Scholar
Vogelsang, I. (2018a). “Can simple regulatory mechanisms realistically be used for electricity transmission investment? The case of H-R-G-V.” Economics of Energy & Environmental Policy 7(1): 63–87.Google Scholar
Vogelsang, I. (2018b). “Net neutrality regulation: Much ado about nothing?” Review of Network Economics 17: 225–243.CrossRefGoogle Scholar
Vogelsang, I. (2019). “Has Europe missed the endgame of telecommunications policy?” Telecommunications Policy 43(1), February: 1–10.Google Scholar
Vogelsang, I. (2020). “A simple merchant-regulatory incentive mechanism applied to electricity transmission pricing and investment: The case of H-R-G-V.” Forthcoming in Hesamzadeh, M. R., Rosellon, J., & Vogelsang, I. (eds.). Transmission Network Investment in Liberalized Power Markets. Springer Verlag, Lecture Notes in Energy.Google Scholar
Vogelsang, I., & Cave, M. (2019). “Framework for promoting competition.” Report prepared for the New Zealand Commerce Commission, November.Google Scholar
Vogelsang, I., & Finsinger, J. (1979). “A regulatory adjustment process for optimal pricing by multiproduct monopoly firms.” Bell Journal of Economics 10: 157–171.Google Scholar
Weiller, C. M., & Pollitt, M. G. (2013). “Platform markets and energy services.” EPRGWP 1334, www.eprg.group.cam.ac.uk/wp-content/uploads/2013/12/1334-PDF.pdfGoogle Scholar
Williamson, O. E. (1975). Markets and Hierarchies: Analysis and Antitrust Implications. New York: Free Press.Google Scholar
Williamson, O. E. (1979). “Transaction-cost economics: The governance of contractual relationships.” Journal of Law and Economics 22: 233–261.Google Scholar
Willig, R. D. (1978). “Pareto-superior nonlinear outlay schedules.” Bell Journal of Economics 9: 56–69.Google Scholar
Xia, J. (2017). “China’s telecommunications evolution, institutions, and policy issues on the eve of 5G: A two-decade retrospect and prospect.” Telecommunications Policy 41: 931–947.Google Scholar
Yoo, C. (2014). “U.S. vs. European broadband deployment: What do the data say?” www.law.upenn.edu/live/files/3352Google Scholar
Accessibility standard: Unknown
Why this information is here
This section outlines the accessibility features of this content - including support for screen readers, full keyboard navigation and high-contrast display options. This may not be relevant for you.Accessibility Information
Accessibility compliance for the HTML of this Element is currently unknown and may be updated in the future.