Prevention of Competition by Competition Law: Unbundling on Fiber-Optic Networks in Japan

Abstract

This paper studies that a regulation that promotes competition in one market may decrease competition in other related markets. I …nd that unbundling regulation prevents new providers from building fiber-optic network constructions in Japan from 2005 to 2009. In particular, when a new technology is introduced, unbundling regulation has an oligopolization effect on the regulated firms. This finding in the Japanese telecommunications industry suggests that unbundling regulation during periods of new technology diffusion may reduce the price of service but also decrease competition in the infrastructure market.

Keywords: Unbundling, FTTH, Entry and Exit, Dynamic Game, Fiber-optic Networks

JEL Classification: K21, L43, L96