Co-operative investment by downstream rivals: network sharing in telecom markets
Journal article, Peer reviewed
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Åpne
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https://hdl.handle.net/11250/3147580Utgivelsesdato
2023Metadata
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- Department of Economics [300]
- Registrations from Cristin [10237]
Sammendrag
Ever-increasing data consumption and evolving technologies make cooperation on investments and network sharing crucial issues in mobile telecommunications markets. In this paper, we analyze incentives for cooperation and investment in product quality. Generalizing quality investment in a Hotelling duopoly model, we allow investment to have heterogeneous effects on consumers’ changing demand responsiveness to prices. If the effect of investment on demand elasticity is weak, consumer surplus and total welfare are higher when firms are prevented from cooperating on quality investment. Otherwise, firms should be allowed to jointly decide on quality improvements and share these improvements as long as they compete in the downstream markets.