Course -- Competition and Regulation

Are the following statements true or false?

1- There is an inherent policy conflict between competition policy and regulation as competition policy tries to establish and safeguard competition whereas modern sector-specific regulation tends to stabilize monopolies.

2- Regulatory agencies require much more sector specific information compared to competition authorities. Their intervention is also usually much more intense.

3- Sector specific regulation usually comes into play in sectors or industries where competition fails to "regulate", e.g. due to (a combination of) economies of scale, scope & density, network effects and market entry barriers.

4- In mobile telecommunications currently three independent network operators and numerous service providers exist in Germany. Sector specific regulation can therefore not be justified in this market under any circumstance whatsoever.

5- According to the disaggregated regulatory approach, sector-specific regulation should be implemented on every level of the value chain. Only by regulating all levels a full functioning of the market can be guaranteed.

6- Regulating those parts of network infrastructures characterized as monopolistic bottlenecks remains an important task even after full market opening: Where network sectors have monopolistic bottleneck areas, they need specific regulation to discipline remaining market power.

7- Liberalization of the telecoms industry has been a great success. Prices have fallen significantly, and consumer choice has increased considerably.

8- As the European Commission has applied similar regulatory rules for all network industries, the railroad industry is another example of a successfully liberalized industry.

9- The "Ladder of investment" approach has been proposed as an alternative to the disaggregated regulatory approach. It is based on the idea that investments by new entrants are gradual as their customer base increases, but until this happens several complementary services provided by incumbents are needed. According to the ladder of investment approach, therefore more regulation is needed at the beginning of the liberalization process compared to the disaggregated approach.

Bonus question

10- Network industries are typically characterized by different vertical network levels which strongly complement each other. On which of these levels can stable market power often be detected?

Select one:

Level 1:Network services

Level 2:Infrastructure management

Level 3:Network infrastructure