Access Pricing, Competition, and Incentives to Migrate From“Old” to “New” Technology - Harvard Kennedy School of Government RWP11-029
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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