Nevertheless, one could easily correct the per-unit costs in the theoretical model but
the central results will remain unchanged. Second, I have assumed market shares to
be constant. A more comprehensive estimation approach should take into account the
time dependence. Due to lags in the data set I refrain from such an approach and only
control for time effects. Finally, more detailed cost information would strongly improve
the analysis of the price-cost margin and, thus, the analysis of off-net profits.
Even with these limitations the findings provide more insight into the strategic interplay
between MNPs in line with regulation and investments. Concerning the recommendation
by the European Commission of May 2009 that LRIC regulation should be implemented
in the market for wholesale voice call termination (Market 16) in all member states I
find that the type of regulation has only a minor impact on investment effects.
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