Article Dans Une Revue Journal of Regulatory Economics Année : 2017

Strategic bypass deterrence

Résumé

In liberalized network industries, competitors can either compete for service using the existing infrastructure (access) or deploy their own capacity (bypass). We revisit this make-or-buy problem making two contributions to the literature. First we analyze both the profit maximizing behavior of an incumbent and the welfare maximizing behavior when the entrant chooses between access and bypass. Second, we extend the baseline model studied in the literature by allowing for fixed costs of network installation. By analogy to the literature on strategic entry deterrence, we distinguish three régimes of blockaded bypass, deterred bypass and accommodated bypass depending on the entrant’s unit cost. We show that the make-or-buy decision of the entrant is not necessarily technologically efficient: when bypass is chosen, it is always the cheapest option but access may be chosen when it is not cost effective.

HAL

relationship_isVariantFormatOf hal-00749318 Preprint Francis Bloch, Axel Gautier. Strategic Bypass Deterrence. 2012. ⟨hal-00749318⟩

Dates et versions

hal-03969908 , version 1 (02-02-2023)

Identifiants

Citer

Francis Bloch, Axel Gautier. Strategic bypass deterrence. Journal of Regulatory Economics, 2017, 52 (2), pp.189-210. ⟨10.1007/s11149-017-9337-7⟩. ⟨hal-03969908⟩
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