Static and Dynamic Efficiency in the European Telecommunications Market: The Role of Regulation on the Incentives to Invest and the Ladder of Investment

In this chapter the authors provide evidence of the effectiveness of European National Regulatory Authorities in applying the basic principles of the ladder of investment. The analysis discusses and compares the regulatory approach adopted in 12 European Countries from January 2005 to July 2007. Results are not easy to interpret, given the peculiarities of the different national markets. Nevertheless, they can conclude that the policies adopted by National Regulatory Authorities are broadly consistent with the ladder of investment theory. IntroductIon to tHe tHeory oF InvestMent ladder With the advent of next generation networks, the telecommunication sector is undergoing a deep transformation: from an industry characterized by a “quasi-monopolistic” infrastructure to an industry where alternative networks compete with the incumbent (and with each other). It is widely accepted that these changes are actually challenging the regulatory approach towards telecommunications: while in the near past regulators’ efforts were aimed at introducing more competition into quasi-monopolistic markets, nowadays regulation DOI: 10.4018/978-1-60566-194-0.ch001