Regulation, Competition, and Liberalization

Armstrong, Mark; Sappington, David E. M.

doi:10.1257/jel.44.2.325

Cited by 282 publications

(151 citation statements)

References 143 publications

(102 reference statements)

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“…Thus, it might be thought that since the incumbent and the entrants compete directly for retail costumers, the former will always benefit from its position as an input supplier, given that it can raise the costs of its retail rivals. However, following Armstrong and Sappington (2006) and Sappington (2006), this is not always the case, because while the incumbent's retail income may increase as its rivals' production costs increase, the incumbent's wholesale profits can fall further than the corresponding increase in its retail profits. In this situation, the incumbent's wholesale profits will fall if the quantity of access bought by the entrants falls at a proportionally higher rate than the access price goes up, which depends on elasticities.…”

Section: Related Literature and Empirical Hypothesesmentioning

confidence: 99%

“…One of the outcomes of the regulatory process within the European broadband sector is the wholesale access price (Edwards and Waverman, 2006). As a regulatory outcome, the access price is subject to some degree of discretion which may ultimately lead to regulatory risk (see Armstrong and Sappington, 2006;Sidak and Spulber, 1998). Moreover, a firm's decision to be a multinational can be seen as forming part of a diversification strategy to reduce in part some of the risks (Levy and Sarnat 1970;García-Canal and Guillén, 2008).…”

Section: Related Literature and Empirical Hypothesesmentioning

confidence: 99%

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Regulatory Environment and Firm Performance in EU Telecommunications Services

Montolio

Trillas²,

Trujillo-Baute

2014

Review of Network Economics

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The IEB research program in Infrastructure and Transport promotes high quality research in those fields in order to assess the economic consequences of investment and policy decisions. The ultimate aim of the program is to generate socially useful knowledge in this important field that is useful to respond to major challenges. Research is methodologically based on the techniques of applied economic analysis, with topics chosen according to their relevance in guiding public policy. Infrastructures and transport policies are closely related with economic growth, public finance, environmental issues and distribution effects at a territorial level. Disseminating research outputs to a broadaudience is an important objective of the program, whose results must be relevant both at national and international level.The Barcelona Institute of Economics (IEB) is a research centre at the University of Barcelona (UB) which specializes in the field of applied economics. The IEB is a foundation funded by the following institutions: Applus, Abertis, Ajuntament de Barcelona, Diputació de Barcelona, Gas Natural and La Caixa. The IEB working papers represent ongoing research that is circulated to encourage discussion and has not undergone a peer review process. Any opinions expressed here are those of the author(s) and not those of IEB. Documents de Treball de l'IEB 2014/15 REGULATORY ENVIRONMENT AND FIRM PERFORMANCE IN EU TELECOMMUNICATIONS SERVICESDaniel Montolio, Francesc Trillas, Elisa Trujillo-Baute ABSTRACT: We empirically estimate the effects of regulated access prices and firms' multinational status on firm performance by using firm, corporate group, and country level information for the European broadband market between 2002 and 2010. Three measures of firm performance are used, namely: market share, turnover and productivity. Special attention is paid to differences in the impact on the performance measures depending on a firm's position as either a market incumbent or entrant. We find that while access prices have a negative effect on entrants' market share and turnover, the effect on incumbents' market share, turnover and productivity is positive. Further, we find that multinational entrants perform better than national entrants in terms of their market share but worse in terms of their turnover and productivity. The opposite is true of incumbent multinationals which perform better than nationals in terms of their turnover and productivity but worse in terms of their market share. This confirms that a firm's multinational status has a significant impact on its performance, and that this impact differs for incumbents and entrants. Finally, when evaluating the impact of access prices on firm performance at the mean performance of national and multinational firms, we find that the impact of access prices is lower for multinational than for national firms.JEL Codes: L51, L25, L96, F23

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Section: Related Literature and Empirical Hypothesesmentioning

confidence: 99%

Section: Related Literature and Empirical Hypothesesmentioning

confidence: 99%

Regulatory Environment and Firm Performance in EU Telecommunications Services

Montolio

Trillas²,

Trujillo-Baute

2014

Review of Network Economics

View full text Add to dashboard Cite

show abstract

“…Theory also tells us that governments can react to market failures with a menu of instruments, including price and quantity regulation, taxes, subsidies, assignment of property rights or simply by taking over a firm or a sector. 4 Evidence, however, suggests that governments are as likely to fail as markets. Multiple goals in politics and the lack of capacity in design and enforcement of policy tools are among the reasons, as discussed.…”

Section: Why Don't Governments Fix Market Failures?mentioning

confidence: 99%

“…6 These facts make it quite likely that distortions in politics can be part of the explanation of performance failures. This is why researchers and practitioners alike argue that governance failure in the sector should be central to any assessment of the sources of 4 See Laffont and Tirole (1993) and Armstrong andSappington (2006, 2007) for an overview of regulatory approach on fixing market failures in infrastructure industries. 5 See Briceño-Garmendia, Smits, and Foster (2008).…”

Section: Why Don't Governments Fix Market Failures?mentioning

confidence: 99%