Access Pricing, Competition, and Incentives to Migrate From "Old" to "New" Technology

 
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Bourreau, Marc
Cambini, Carlo
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https://doi.org/10.1016/j.ijindorg.2012.08.007
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Bourreau, Marc, Carlo Cambini, and Pinar Dogan. 2011. Access Pricing, Competition, and Incentives to Migrate From "Old" to "New" Technology. HKS Faculty Research Working Paper Series RWP11-029, John F. Kennedy School of Government, Harvard University.
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.
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http://nrs.harvard.edu/urn-3:HUL.InstRepos:5098425

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