A Research on Infrastructure Penetration and Transition of Market Structure in Network Industries

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This research examines the effect of regulation and a firm's strategic behavior on infrastructure penetration and market structures in network industries. We obtain two main analytical results. First, a dynamic analysis shows that universal service obligation induces the delay of infrastructure penetration, which in turn implies the enhancement of inequality among customers. Second, the strategic investment behavior of an infrastructure owner can distort access regulation, and it also induces overuse of a bypass(i. e., underuse of access) from a welfare perspective.