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Access pricing, competition, and incentives to migrate from “old” to “new” technology

Author

Listed:
  • Marc Bourreau

    (SES - Département Sciences Economiques et Sociales - Télécom ParisTech, ECOGE - Economie Gestion - I3 SES - Institut interdisciplinaire de l’innovation de Telecom Paris - Télécom ParisTech - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

  • Carlo Cambini

    (Polito - Politecnico di Torino = Polytechnic of Turin)

  • Pinar Doğan

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 the coverage of the new technology varies non-monotonically with the access price of the old technology: 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 retail-level migration effect. When the new technology is also subject to access provision, we find that migration from the old to the new generation network at the wholesale level can be incentivized if a positive correlation between the access prices (to the two old and new generation networks) is maintained.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Marc Bourreau & Carlo Cambini & Pinar Doğan, 2012. "Access pricing, competition, and incentives to migrate from “old” to “new” technology," Post-Print hal-02085295, HAL.
    • Handle: RePEc:hal:journl:hal-02085295
    DOI: 10.1016/j.ijindorg.2012.08.007
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    References listed on IDEAS

    as
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    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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