Deregulation and Managed Competition in Network Industries

The competitive transformation of telecommunications and other network industries in the United States has caused governmental policy makers to be increasingly concerned with the 'fairness" of the deregulatory process. In this Essay, Professors Sidak and Spulber offer a set of concrete guidelines that regulators of network industries should follow in removing regulatory controls: To achieve the productive and allocative benefits of competition and to ensure that the transition from regulation to competition is accomplished fairly, regulators should observe the principles of economic incentive, equal opportunity, and impartiality. Only by treating incumbents and entrants symmetrically and resisting the temptation to "manage" competition, Professors Sidak and Spulber argue, will the regulators ensure that the deregulatory process in network industries will yield all of the benefits of market competition.