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Hardcover | Out of Print | 336 pp. | 6 x 9 in | 20 illus. | November 1999 | ISBN: 9780262122238
Paperback | $48.00 X | £39.95 | 336 pp. | 6 x 9 in | 20 illus. | January 2001 | ISBN: 9780262621502
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Competition in Telecommunications


Theoretical models based on the assumption that telecommunications is a natural monopoly no longer reflect reality. As a result, policymakers often lack the guidance of economic theorists. Competition in Telecommunications is written in a style accessible to managers, consultants, government officials, and others. Jean-Jacques Laffont and Jean Tirole analyze regulatory reform and the emergence of competition in network industries using the state-of-the-art theoretical tools of industrial organization, political economy, and the economics of incentives.The book opens with background information for the reader who is unfamiliar with current issues in the telecommunications industry. The following sections focus on four central aspects of the recent deregulatory movement: the introduction of incentive regulation; one-way access (access given by a local network to the providers of complementary segments, such as long-distance or information services); the special nature of competition in an industry requiring two-way access (whereby competing networks depend on the mutual termination of calls); and universal service, in particular the two leading contenders for the competitively neutral provision of universal service: the use of engineering models to compute subsidies and the design of universal service auctions. The book concludes with a discussion of the Internet and regulatory institutions.Copublished with the Center for Economic Studies and the Ifo Institute

About the Authors

Jean-Jacques Laffont was Professor of Economics at the

Université des Sciences Sociales de Toulouse and the Institut

Universitaire de France and Director of the Institut d'Economie


Jean Tirole, the 2014 Nobel Laureate in Economics, is Scientific Director of IDEI (Institut d'Economie Industrielle), Chairman of the Board of TSE (Toulouse School of Economics), and Annual Visiting Professor of Economics at MIT.


“This book does an outstanding job of explaining how economic theory can help improve regulation of telecommunications. The authors capture the interaction of competition and regulation in a very sophisticated manner. I recommend the book to economics students, regulators, and other business people and government officials with an interest in telecommunications.”
Jerry A. Hausman, MacDonald Professor of Economics, MIT
“This book is as systematic, probing, and original an exploration of the important regulatory issues as one can hope for. The authors demonstrate the great analytic competence for which they are deservedly noted.”
William J. Baumol, Director, C.V. Starr Center for Applied Econoimcs, New York University
“This book is masterful application of the best of economic theory to central issues in telecommunications policy. Throughout, Laffont and Tirole capture the essence of complex issues succinctly and elegantly, without compromising rigor or accessibility. Anyone interested in telecommunications, or in the transition from regulated monopoly to competition more generally, will benefit tremendously from this book.”
Marius Schwartz, Professor of Economics, Georgetown University
“Laffont and Tirole show that the tools of economic analysis, when applied with exceptional skill and concern for the facts, can illuminate the difficult policy problems that crop up along the road to competition in telecommunications. This book will quickly become a standard reference.”
Richard Schmalensee, Dean, MIt Sloan School of Management
“"Laffont and Tirole have combined their mastery of economic theorywith real-world telecom know-how to produce a gem of a book. If youwant to deepen your understanding of telecom—and of networkindustries generally-you must read this book." Carl Shapiro, Transamerica Professor of Business Strategy, University of California, Berkeley, and author of InformationRules: A Strategic Guide to the Network Economy