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Strategic Cross-Subsidies and Vertical Integration in Opening Telecommunications Markets

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Authors
Gasmi, F.; Laffont, J. J.; Sharkey, W. W.
Issue Date
2001-07
Publisher
Institute of Economic Research, Seoul National University
Citation
Seoul Journal of Economics, Vol.14 No.3, pp. 323-350
Keywords
Industrial organizationeconomics of regulationTelecommunication
Abstract
This paper analyzes the strategic role of cross-subsidies under vertical integration. We consider an incumbent firm which operates in a regulated market (switched telecommunications service) and a competitive market (unswitched service). Fitting cost data generated with an engineering cost proxy model to smooth functional forms, we first assess the extent of cross-subsidies due to allocation of common costs and managerial effort. We then focus on the cost incentives of the regulatory scheme in the regulated segment and identify situations where the incumbent may blockade entry in the competitive segment.
ISSN
1225-0279
Language
English
URI
https://hdl.handle.net/10371/1252
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.14(3) (Fall 2001)
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