Access Pricing, Competition, and Incentives to Migrate from 'Old' to 'New' Technology
48 Pages Posted: 1 Aug 2011
Date Written: July 28, 2011
In this paper, we analyze the incentives of an incumbent and an entrant to migrate from an "old" technology to a "new" technology, and discuss how the terms of wholesale access affect this migration. We show that a higher access charge on the legacy network pushes the entrant firm to invest more, but has an ambiguous effect on the incumbent's investments, due to two conflicting effects: the wholesale revenue effect, and the business migration effect. If both the old and the new infrastructures are subject to ex-ante access regulation, we also find that the two access charges are positively correlated.
Keywords: Access pricing, Investment, Next generation networks
JEL Classification: L96, L51
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