Access Pricing, Competition, and Incentives to Migrate from 'Old' to 'New' Technology

48 Pages Posted: 1 Aug 2011

See all articles by Marc Bourreau

Marc Bourreau

Telecom ParisTech

Carlo Cambini

Politecnico di Torino & EUI - Florence School of Regulation; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Pinar Dogan

Harvard University - Harvard Kennedy School (HKS)

Date Written: July 28, 2011

Abstract

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

Suggested Citation

Bourreau, Marc and Cambini, Carlo and Dogan, Pinar, Access Pricing, Competition, and Incentives to Migrate from 'Old' to 'New' Technology (July 28, 2011). HKS Working Paper No. RWP11-029, Available at SSRN: https://ssrn.com/abstract=1898275 or http://dx.doi.org/10.2139/ssrn.1898275

Marc Bourreau

Telecom ParisTech ( email )

46, rue Barrault
Paris Cedex 13, F-75634
France

Carlo Cambini

Politecnico di Torino & EUI - Florence School of Regulation ( email )

Corso Duca degli Abruzzi, 24
Torino, Torino 10129
Italy
+390115647292 (Phone)
+390115647299 (Fax)

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Pinar Dogan (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-496-6757 (Phone)
617-496-5747 (Fax)

HOME PAGE: http://scholar.harvard.edu/pdogan/home

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