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

Fabian Eltges, Niklas Fourberg and Lukas Wiewiorra

No 3a, WIK Working Papers from WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH, Bad Honnef

Abstract: 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.

Keywords: Access pricing; Multi-product competition; Product differentiation; Next generation networks (search for similar items in EconPapers)
JEL-codes: D4 L13 L51 L96 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-com, nep-int and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wikwps:3a

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