In the telecommunications industry, the ladder-of-investment approach claims that service-based competition (when entrants lease access to incumbents' facilities) can serve as a “stepping stone” for facility-based entry (when entrants build their own infrastructures to provide services). In...

We introduce a model of asymmetric competition where two network operators with different investment costs may build an internet access infrastructure and where a virtual operator provides services through third-party access. We show that the virtual operator requests access from the low cost...