Showing papers by "Øystein Foros published in 2001"
TL;DR: This model exhibits network externalities and finds that the firms overinvest, as compared to the welfare maximising investment level, when it is costly to invest in compatibility.
83 citations
TL;DR: In this paper, the authors analyze roaming policy in the market for mobile telecommunications and show that under collusion at the investment stage, firms' and a benevolent welfare maximizing regulator's interests coincide, and no regulatory intervention is needed.
Abstract: We analyze roaming policy in the market for mobile telecommunications. Firms undertake quality improving investments in network infrastructure in order to increase geographical coverage, capacity in a given area, or functionality. Prior to investments, roaming policy is determined. We show that under collusion at the investment stage, firms’ and a benevolent welfare maximizing regulator’s interests coincide, and no regulatory intervention is needed. When investments are undertaken non-cooperatively, firms’ and the regulator’s interests do not coincide. Contrary to what seems to be the regulator’s concern, firms would decide on a higher roaming quality than the regulator. The effects of allowing a virtual operator to enter are also examined. Furthermore, we discuss some implications for competition policy with regard to network infrastructure investment.
42 citations
TL;DR: In this article, the authors examine the interplay between two networks and how it affects the domestic public policy towards a domestic provider of local access, and find that a cost-oriented regulation is detrimental to domestic welfare, because it shifts profit to the foreign provider of global access.
Abstract: Access to both a local and a global network is needed in order to get complete connection to the Internet. The purpose of this article is to examine the interplay between those two networks and how it affects the domestic public policy towards a domestic provider of local access. We find that a cost-oriented regulation is detrimental to domestic welfare, because it shifts profit to the foreign provider of global access. The optimal policy is that the regulator commits itself to set an access price above costs, possibly the same price as in an unregulated market economy. A regulation of the global access price has a non-monotonic effect on domestic welfare, and there is a potential conflict between international and domestic regulation policy.
30 citations
TL;DR: In this paper, the authors argue that the conclusion depends on which type of business the virtual operator has and there is no "one size fits all"-solution for the facility-based firm.
Abstract: We see an intense debate whether the facility-based telecommunication firms should open up their networks to virtual operators. In this paper we argue that the conclusion depends on which type of business the virtual operator has. Some virtual operators will mainly reduce the revenue potential for the facility-based firm, while other virtual operator give rise to some extra profit that cannot be extracted to the facility-based firm's own downstream activities. Hence, there is no “one size fits all”-solution for the facility-based firm. However, the important issue is whether the facility-based firm has the opportunity to connect virtual operators that look like a new customer, while they disconnect virtual operators that constitute new rivals.
3 citations
01 Oct 2001
TL;DR: In this article, the authors show that for other countries than the US, the optimal regulation policy depends crucially on such factors as the degree of product differentiation in the end user market and the regulator's ability to credibly commit itself to a price cap.
Abstract: The Internet can be seen as the convergence of di®erent industries, such as telecommunication, software and media, into an international oligopoly offering complementary products. In most of these industries we have dominant ̄rms, but domestic telecommunication ̄rms providing local access are the only ones facing a restrictive regulatory regime. The other dominant ̄rms are typically US owned. We show that for other countries than the US the optimal regulation policy depends crucially on such factors as the degree of product di®erentiation in the end user market and the regulator's ability to credibly commit itself to a price cap. We are indebted to seminar participants at Norwegian School of Economics and Business Administration and Norwegian University of Science and Technology for helpful comments.We thank the programme SKIKT in the Research Council of Norway for ̄nancial support through the Institute for Research in Economics and Business Administration
1 citations