From legacy to the future: Incentivising demand migration through access fees

Arbeitspapier

In this paper, we analyze how wholesale access fees of a crucial input can be utilized to influence demands for products of different technologies and the deployment sequence between an incumbent and entrant firm. In a setting of multi-product competition with horizontally differentiated products we find that the access fee gives rise to asymmetric pricing incentives for the entrant firm if she offers a legacy and new product in parallel. The entrant's price for the new product decreases in the access fee while its legacy price increases with the aim to induce intra-brand legacy-to-new migration of demand. Fur- thermore, a regulator can depart from the socially optimal access fee and use this entrant's pricing channel to effectively promote demand side take-up of the new technology. Lastly, it is welfare beneficial in a sequential deployment process, that the entrant moves first to introduce the new technology while such a move can be fostered by a strategic use of the access fee that lowers profits from competition based on legacy products.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIK Working Paper ; No. 3a

Classification and Topics

• Classification: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Economics of Regulation ; Telecommunications
• Subject: Access pricing ; Multi-product competition ; Product differentiation ; Next generation networks

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Eltges, Fabian ; Fourberg, Niklas ; Wiewiorra, Lukas
• Event: Veröffentlichung
• (who): WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste
• (where): Bad Honnef
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/270988
• Last update: 10.03.2025, 11:44 AM CET