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Faculty Research Working Paper Series
Pinar Dogan
Lecturer in Public Policy
phone: (617)496-5865
Access Pricing, Competition, and Incentives to Migrate From "Old" to "New" Technology
Bourreau, Marc, Carlo Cambini, and Pinar Dogan. "Access Pricing, Competition, and Incentives to Migrate From "Old" to "New" Technology." HKS Faculty Research Working Paper Series RWP11-029, July 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.
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