On the Regulation of Networks as Complex Systems: A Graph Theory Approach
Daniel F. Spulber
Northwestern University - Kellogg School of Management
Christopher S. Yoo
University of Pennsylvania Law School; University of Pennsylvania - Annenberg School for Communication; University of Pennsylvania - School of Engineering and Applied Science
Northwestern University Law Review, Vol. 99, p. 1687, Summer 2005
Vanderbilt Law and Economics Research Paper No. 05-14
Vanderbilt Public Law Research Paper No. 05-15
Northwestern Law & Econ Research Paper No. 05-14
The dominant approach to regulating communications networks treats each network component as if it existed in isolation. In so doing, the current approach fails to capture one of the essential characteristics of networks, which is the complex manner in which components interact with one another when combined into an integrated system. In this Essay, Professors Daniel Spulber and Christopher Yoo propose a new regulatory framework based on the discipline of mathematics known as graph theory, which better captures the extent to which networks represent complex systems. They then apply the insights provided by this framework to a number of current policy issues, including the decision to apply the same methodology to set prices for interconnection and access to unbundled network elements under the Telecommunications Act of 1996, the decision to base access rates on cost, proposals to base access prices on market benchmarks, compelled access to broadband networks, and the regulation of Internet telephony. They also explore the extent to which the framework can be employed to support a formal calculation of regulated rates, concluding that a shift to a graph theoretical framework has the potential to revolutionize network policy.
Number of Pages in PDF File: 37Accepted Paper Series
Date posted: May 20, 2005
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