This book applies new advances in economic theory regarding the asymmetry of information between firms and their regulators to the design of improved telecommunications regulation.

We examine settings where input prices are negotiated by industry suppliers, rather than dictated by regulators. We find that the input buyer may agree to pay a high price for an input because the high price serves to reduce the intensity of retail price competition with the input seller. Full...

This article reviews the major insights of the economics literature regarding the design of service quality regulation in public utility industries. The focus is on generic service quality issues of primary relevance in the industries, which include the electricity, telecommunications, and water...

We analyze the incentives of a vertically-integrated producer (VIP) to engage in “self-sabotage”.Self-sabotage occurs when a VIP intentionally increases its upstream costs and/or reduces the quality of its upstream product. We identify conditions under which self-sabotage is profitable for...

This paper demonstrates that vertical divestiture may increase consumer welfare even when the divestiture eliminates substantial scope economies and precludes only limited sabotage. More generally, the merits of vertical divestiture are shown to vary with: (1) the type and the intensity of...