Discussion paper

DP9376 Cooperative Investment, Uncertainty and Access

We investigate cooperative investment for the deployment of a new infrastructure, and how it interacts with access obligations and demand uncertainty. Co-investment increases total coverage only if service differentiation and/or cost savings from joint investment, in particular due to high uncertainty, are high. Mandated access reduces incentives for co-investment not only through lower returns but also by the existence of the access option itself. Voluntary access provision increases infrastructure coverage but reduces social welfare by softening competition.

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Citation

Hoernig, S and C Cambini (2013), ‘DP9376 Cooperative Investment, Uncertainty and Access‘, CEPR Discussion Paper No. 9376. CEPR Press, Paris & London. https://cepr.org/publications/dp9376