Should network operators be allowed to build joint facilities?

Abstract

In this paper, we address the issue of how the possibility for areements among network operators about building joint facilities affects their networks qualities, their profits and social welfare. We show that allowing the network operators to build joint facilities can make the network operators to increase their network qualities when they decide so simultaneously. When we analyze entry, only the incumbent increases his network quality. The main result is that network operators and the regulator coincide in thier decisions about how much the network operators should build jointly when the network operators decide simultaneously their network qualities. The same result arises when we analyze entry and the network operators are sufficiently differentiated. But, if there is entry and the network operators are not sufficiently differentiated, a regulator is hended to force the network operators to build joint facilities, what is very surprising from the current National Regulatory point of vie w.