Local Telephone Exchanges, Regulation, and Entry

This paper explores the relationship between technology and the policies that govern competition in the local telephone business. Analysis of competition policies requires a "long run" modeling perspective in which not only the entry and exit of firms are allowed but also allowed in changes in the nature of the investment in the underlying network technology such as network backbone and it s topology. This long run perspective requires a focus on the sources and conditions of joint production and public goods that exist in the production process and how they are influenced by the finance of the business and the constraints policies placed on firms to provide services that are not profitable.