"Strategic investments with spillovers, vertical integration and foreclosure in the broadband access market"
JEL codes: L13, L22, L43, L51, L96
Keywords: Broadband, strategic investment, vertical integration
Abstract: We analyse competition between two retailers of broadband access when
they differ in their ability to offer value-added services. One retailer is
vertically integrated and controls the input-market for local access. This firm
invests to increase the input quality (upgrading to broadband) before an access
price regulation is set. We first show that access price regulation may lower
consumer surplus and welfare if retailers do not differ too much. Second, if
the integrated firmís ability to offer value-added services is much higher than
that of the rival, the integrated firm uses overinvestment as an alternative foreclosure
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