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Cabral, Luís --- "Modelling Competition and Regulation in Wireless Telecommunications: A Progress Report" [2010] ELECD 358; in Mateus, M. Abel; Moreira, Teresa (eds), "Competition Law and Economics" (Edward Elgar Publishing, 2010)

Book Title: Competition Law and Economics

Editor(s): Mateus, M. Abel; Moreira, Teresa

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848449992

Section: Chapter 10

Section Title: Modelling Competition and Regulation in Wireless Telecommunications: A Progress Report

Author(s): Cabral, Luís

Number of pages: 7

Extract:

10. Modelling competition
and regulation in wireless
telecommunications: a progress
report
Luís Cabral1

1. INTRODUCTION AND SUMMARY

The conference program states that mergers in regulated markets, and
particularly in telecommunications and energy, pose particular problems
because of scale and network economies, and due to the intersection of
competition and regulatory issues.
In this chapter, I focus precisely on the intersection of competition and
regulatory issues in general, and on the particular case of wireless telecom-
munications, an industry where network economies are quite important.
About a decade ago, Laffont, Rey and Tirole (1998a,b) (hereafter LRT)
lamented the `lack of a conceptual framework' to analyze competition in
the telecommunications industry. In fact, sound competition policy must
be based on a coherent conceptual model. This is true of any form of eco-
nomic policy, and competition policy is no exception.
LRT filled the above void by introducing a model that `depicts the
competition between two differentiated networks.' They analyzed a series
of important regulatory issues, including deciding whether to allow price
discrimination (different prices for on-net and off-net calls) and setting
access charges.
In this chapter I report on a new framework for the dynamic analysis of
industries with network effects (Cabral, 2008b); and consider applications
of this framework to the analysis of regulation and competition policy in
the wireless telecommunications industry. The set of issues in which I am
interested is similar to, but different from, LRT's. More importantly, the
nature of the framework I consider ...