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Abstract: Regulatory Competition in Network Interconnection Pricing
Abstract
Regulatory Competition in Network Interconnection Pricing
The Review of Network Economics
Vol. 7, Issue 1 - March 2008, pp 111 - 135
Authors
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Per J. Agrell
Louvain School of Management and CORE, Université catholique de Louvain
E-mail: per.agrell@uclouvain.be
Jerome Pouyet
Department of Economics, Ecole Polytechnique France
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Abstract
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This paper covers network investment problems under decentralized control of regulation, infrastructure ownership and management. The model features two countries managing domestic infrastructures, used simultaneously for downstream international service provision. Initially, the welfare losses from non-cooperative investment financing policy and access pricing are derived. The impact of strategic interaction between the countries' access prices on the choice of financing policy is investigated. Under strict budget balancing, there are no incentives for efficiency improving investments. Further, investment coordination is shown useless in the absence of regulatory coordination. Illustrations from European network regulation policy for energy and rail are presented.
Keywords: regulation, infrastructure, access prices, Europe
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