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Opening Networks to Competition

The Regulation and Pricing of Access

  • David Gabel
  • David F. Weiman
Book

Part of the Topics in Regulatory Economics and Policy Series book series (TREP, volume 27)

Table of contents

  1. Front Matter
    Pages i-x
  2. Introduction

    1. David Gabel, David F. Weiman
      Pages 1-6
  3. Networks and Access: Theoretical and Policy Considerations

    1. Front Matter
      Pages 7-7
    2. Nicholas Economides, Lawrence J. White
      Pages 9-29
    3. Bridger M. Mitchell, Ingo Vogelsang
      Pages 31-47
    4. William G. Shepherd
      Pages 49-71
  4. Case Studies

  5. Back Matter
    Pages 239-245

About this book

Introduction

David Gabel and David F. Weiman The chapters in this volwne address the related problems of regulating and pricing access in network industries. Interconnection between network suppliers raises the important policy questions of how to sustain competition and realize economic efficiency. To foster rivalry in any industry, suppliers must have access to customers. But unlike in other sectors, the very organization of network industries creates major impediments to potential entrants trying to carve out a niche in the market. In traditional sectors such as gas, electric, rail, and telephone services, these barriers take the form of the large private and social costs necessary to duplicate the physical infrastructure of pipelines, wires, or tracks. Few firms can afford to finance such an undertaking, because the level of sunk costs and the very large scale economies make it extremely risky. In other newer sectors, entrants face less tangible but no less pressing constraints. In the microcomputer industry, for example, high switching costs can prevent users from experimenting with alternative, but perhaps more efficient hardware platforms or operating systems. Although gateway technologies can reduce these barriers, the installed base of an incumbent can create powerful bandwagon effects that reinforce its advantage (such as the greater availability of compatible peripherals and software applications). In the era of electronic banking, entrants into the automated teller machine· (A TM) and credit card markets face a similar problem of establishing a ubiquitous presence.

Keywords

Potential Software communication interconnect model network organizations

Editors and affiliations

  • David Gabel
    • 1
  • David F. Weiman
    • 1
    • 2
  1. 1.Queens CollegeThe City University of New YorkUSA
  2. 2.Queens College, The City University of New York and the Social Science Research CouncilUSA

Bibliographic information