TITLE:
Co-Investment in the Sharing of Telecommunications Infrastructures
AUTHORS:
François Jeanjean
KEYWORDS:
Mobile Telecommunications, Network Sharing, Competition, Consumer Welfare
JOURNAL NAME:
Theoretical Economics Letters,
Vol.12 No.5,
September
30,
2022
ABSTRACT: This paper studies the effects of infrastructure sharing agreements on
telecommunications markets. Using a theoretical two stage game model with an
investment stage and a competition stage where firms compete “à la Cournot”, I
find that, infrastructure sharing agreements increase investment at industry level.
Indeed, the sharing of infrastructures reduces costs of investment for involved
operators and encourages them to invest more. This holds except if involved
operators are much less efficient than their competitors (i.e., they have much
higher marginal costs before investment). Furthermore, infrastructure sharing
agreements generally increase both investments and consumer surplus, except if
involved operators are much less efficient than their competitors or if they
have very different level of efficiency. The infrastructure sharing agreement
is even more effective when the most efficient operators are involved.