Network Access, Regulation and Antitrust (The Economics of Legal Relationships)

286 Pages·2005·2.9 MB·English

by  Diana L. Moss

Network Access, Regulation and Antitrust
The rapid growth of network industries has generated much comment amongst
academics and policymakers. This timely volume takes an interdisciplinary, case-
study based, approach to examining a wide range of network issues and
experiences in order to develop recommendations that are useful in informing
antitrust, regulatory, and legislative policy. Legal, economic, political, and
institutional aspects of network access problems are identified.
Part I focuses on five key topics that are fundamental to reasoned analysis of
the access problem in antitrust enforcement actions or regulatory policy: natural
monopoly and network externalities, tipping, essential facilities, access pricing
and access remedies. Part II presents ten case studies of network access: freight
railroads, electricity transmission, natural gas pipelines, local
telecommunications, long distance telecommunications, broadband, automated
teller machines, internet browsers, internet-based airline and travel services, and
online music. Part III draws out relevant comparisons and contrasts from the key
topics and case studies to develop a number of policy recommendations.
Network Access, Regulation and Antitrust will prove invaluable to students of
business, economics, law and economics, and industrial economics. This book
will also be of interest to policymakers and academics working in this field.
Diana L.Moss is Vice President and Senior Research Fellow at the American
Antitrust Institute.
The Economics of Legal Relationships
Edited by Nicholas Mercuro and Michael D.Kaplowitz
Michigan State University
Volume 1*
Compensation for Regulatory Takings
Thomas J.Miceli and Kathleen Segerson
Volume 2*
Dispute Resolution
Bridging the settlement gapEdited by David A.Anderson
Volume 3*
The Law and Economics of Development
Edited by Edgardo Buscaglia, William Ratliff and Robert Cooter
Volume 4
Fundamental Interrelationships Between Government and Property
Edited by Nicholas Mercuro and Warren J.Samuels
Volume 5
Property Rights, Economics, and the Environment
Edited by Michael Kaplowitz
Volume 6
Law and Economics in Civil Law Countries
Edited by Thierry Kirat and Bruno Deffains
Volume 7
The End of Natural Monopoly
Deregulation and competition in the electric power industryEdited by Peter
Z.Grossman and Daniel H.Cole
Volume 8
Network Access, Regulation and Antitrust
Edited by Diana L.Moss
*Volumes 1, 2 and 3 are published by and available from Elsevier.
iii
The Economics of Legal Relationships
Sponsored by the Michigan State University College of Law
STATEMENT OF SCOPE
The Economics of Legal Relationships is a book series dedicated to publishing
original scholarly contributions that systematically analyze legal-economic
issues. Each book can take a variety of forms:
• It may be comprised of a collection of original articles devoted to a single
theme, edited by a guest volume editor.
(cid:127) It may be a collection of refereed articles derived from the Series Editors’
“call for papers” on a particular legal-economic topic.
(cid:127) An individual may wish to (co)author an entire volume.
Each book in the series is published in hardback, approximately 250–300 pages
in length and is dedicated to:
(cid:127) Formulate and/or critique alternative theories of law and economics—
including—the new law and economics, the economics of property rights,
institutionalist and neoinstitutionalist law and economics, public choice
theory, or social norms in law and economics.
(cid:127) Analyze a variety of public policy issues related to the interface between
judicial decisions and/or statutory law and the economy.
(cid:127) Explore the economic impact of political and legal changes brought on by new
technologies and/or environmental and natural resource concerns.
(cid:127) Examine the broad array of legal/economic issues surrounding the
deregulation-reregulation phenomena.
(cid:127) Analyze the systematic effects of legal change on incentives and economic
performance.
CALL FOR AUTHORS/VOLUME EDITORS/TOPICS
An individual who is interested in either authoring an entire volume, or editing a
future volume, of The Economics of Legal Relationships should submit a 3–5
page prospectus to one of the series editors. Each prospectus must include: (1)
the prospective title of the volume; (2) a brief description of the organizing
theme of the volume, whether single authored or edited; (3) an identification of
the line of literature from which the proposed topic emanates; and (4) either a table
of contents or, if edited, a list of potential contributors along with tentative titles
of their contributions. Send prospectus to either series editor. Please note that the
series editors only accept individual manuscripts for publication consideration in
response to a specific “Call for Papers.”
iv
Send prospectus directly to either series editor:
Professor Nicholas Mercuro
Michigan State University
College of Law
East Lansing, MI 48824
phone: [phone]
e-mail [email protected]
Professor Michael D.Kaplowitz
Michigan State University
Department of Community Agriculture,
Recreation, and Resource Studies
East Lansing, MI 48824
phone: [phone]
e-mail [email protected]
Network Access, Regulation
and Antitrust
Edited by Diana L.Moss
American Antitrust Institute
LONDON AND NEW YORK
First published 2005
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Ave, New York, NY 10016
Routledge is an imprint of the Taylor & Francis Group
This edition published in the Taylor & Francis e-Library, 2005.
“To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of
thousands of eBooks please go to www.eBookstore.tandf.co.uk.”
© 2005 selection and editorial matter, American Antitrust Institute; individual chapters, the
contributors
All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by
any electronic, mechanical, or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
A catalog record for this book has been requested
ISBN 0-203-02111-8 Master e-book ISBN
ISBN 0-415-70079-5 (Print Edition)
Contents
List of figures ix
List of tables x
Notes on contributors xi
Acknowledgments xiv
Introduction 1
DIANA L.MOSS AND PETER FOX-PENNER
PART I Key topics 10
Preface to part I 11
Topic 1 Networks and natural monopoly 15
JOHN E.KWOKA
Topic 2 Tipping 25
RUDOLPH J.R.PERITZ
Topic 3 The essential facility doctrine: a brief overview 32
NORMAN HAWKER
Topic 4 Access pricing and the “efficient component pricing 48
rule”
LAWRENCE J.WHITE
Topic 5 Access remedies after Trinko 55
JONATHAN L.RUBIN, NORMAN HAWKER AND D.ADAM
CANDEUB
PART II Case studies 73
Preface to part II 74
Case 1 Freight railroads 76
JOHN E.KWOKA AND LAWRENCE J.WHITE
Case 2 Electricity transmission 86
DIANA L.MOSS
viii
Case 3 Natural gas pipelines 101
RICHARD P.O’NEILL
Case 4 Local telecommunications 115
JONATHAN L.RUBIN
Case 5 Long distance telecommunications 136
MICHAEL D.PELCOVITS
Case 6 Broadband 145
RICHARD M.BRUNELL
Case 7 Automated teller machines 171
DONALD I.BAKER
Case 8 Internet browsers 177
NORMAN HAWKER
Case 9 Internet-based airline and travel services 189
ALBERT A.FOER
Case 10 Online music 212
HARRY FIRST
PART III Lessons learned and policy recommendations 242
Lessons learned and policy recommendations 243
DIANA L.MOSS
Annotated bibliography 261
Index 264
Figures
I.1 A star network 12
I.2 Two star networks connected by a trunk line 12
I.1.1 Supply-side economies of scale 16
I.1.2 A communications network 17
I.1.3 A transport network 19
I.1.4 S-curve 20
I.4.1 The bottleneck incumbent and the entrant 49
II.1.1 A stylized rail network 77
II.1.2 The problem of access 79
II.5.1 AT & T’s share of toll revenues, 1984–2001 138