A Clash of Regulatory Paradigms

Abstract:     
The decision whether to mandate access to telecommunications networks presents policymakers with a choice between two regulatory paradigms. One focuses on breaking down the traditional monopoly by stimulating competitive entry; the other surrenders to the monopoly and simply seeks to allocate the monopoly facility. The theoretical and empirical literature both suggest that whenever competition is feasible, policymakers should generally follow the first course by refusing to mandate access. Moreover, when competition is feasible but not yet present, policymakers should mandate access only if the short-run static efficiency losses from monopoly dominate the long-run dynamic efficiency gains.

Number of Pages in PDF File: 8

Accepted Paper Series