Infrastructure co-investment and innovation for industrial development: A simulation-based analysis of China’s telecommunications sector

This study investigates how network-sharing co-investment strategies affect innovation and industrial development in China’s telecommunications sector, which is composed entirely of state-owned enterprises (SOEs). Using a simulation-based approach calibrated with data from China’s 5G infrastructure rollout (2021–2022), we assess equilibrium outcomes under three co-investment scenarios. Our findings show that co-investment enhances 5G coverage, boosts R&D investment, and improves social welfare, yet firms may be reluctant to fully participate due to profit trade-offs under welfare-oriented investment objectives. These results reveal the dynamic interplay between technological collaboration and innovation incentives in public oligopolies. The study expands co-investment theory for state-owned markets and provides policy recommendations for inclusive, welfare-enhancing infrastructure strategies in developing economies, with broader implications for innovation-driven industrial development.