Coexistence of service- and facility-based competition: The relevance of access prices for "make-or-buy"-decisions

Arbeitspapier

This paper models competition between two firms, which provide broadband Internet access in regional markets with different population densities. The firms, an incumbent and an entrant, differ in two ways. First, consumers bear costs when switching to the entrant. Second, the entrant faces a make-or-buy decision in each region and can choose between service-based and facility-based entry. The usual trade-off between static and dynamic efficiency does not apply in the sense that higher access fees might yield both, lower retail prices and higher total coverage. This holds despite a strategic effect in the entrant's investment decision. While investment lowers marginal costs in regions with facility-based entry, it intensifies competition in all regions. We show that the cost-reducing potential of investments dominates the strategic effect: Higher access fees increase facility-based competition, decrease retail prices and increase total demand.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: MAGKS Joint Discussion Paper Series in Economics ; No. 07-2011

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Oligopoly and Other Imperfect Markets ; Economics of Regulation ; Telecommunications
• Thema: broadband access markets ; facility- and service-based entry ; investments ; economies of density ; switching costs ; Breitbandkommunikation ; Internet ; Netzzugang ; Wettbewerb ; Service Provider ; Markteintritt ; Make or Buy ; Wechselkosten ; Bevölkerungsdichte ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Bender, Christian M. ; Götz, Georg
• Ereignis: Veröffentlichung
• (wer): Philipps-University Marburg, Faculty of Business Administration and Economics
• (wo): Marburg
• (wann): 2011

Weitere Informationen

• Handle: http://hdl.handle.net/10419/56526
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ