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

  • Bourreau, Marc

    (Telecom ParisTech and CREST-LEI, Paris)

  • Cambini, Carlo

    (Polytechnic University of Turin)

  • Dogan, Pinar

    (Harvard University)

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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Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp11-029.

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Date of creation: Jul 2011
Date of revision:
Handle: RePEc:ecl:harjfk:rwp11-029
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  12. Bourreau, Marc & Dogan, Pinar, 2005. "Unbundling the local loop," European Economic Review, Elsevier, vol. 49(1), pages 173-199, January.
  13. Tobias Kretschmer, 2008. "SPLINTERING AND INERTIA IN NETWORK INDUSTRIES -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 56(4), pages 685-706, December.
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  22. Dogan, Pinar & Bourreau, Marc & Manant, Matthieu, 2010. "A Critical Review of the “Ladder of Investment†Approach," Scholarly Articles 4777447, Harvard Kennedy School of Government.
  23. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
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