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Shooting in the Dark -- Owen Comments Waikiki Conference

Nov 2010
Working Paper
10-013
By  Bruce Owen
Only when we understand why open access is necessary can we design an implementation that is responsive to the particular form of market failure that gives rise to the need for regulatory intervention. Otherwise, we are “shooting in the dark.” There are at least two equal access issues: First, should competitors have equal access to each other’s facilities, and second, should competitors have equal access to each other’s entertainment and other content. The answers depend on whether such departures from normal competition policy would enhance consumer welfare. Normal competition policy is to rely on market forces to allocate resources in a way that enhances consumer welfare. Competition generally produces supplier incentives that are compatible with welfare maximization. Centralized allocation and regulation in principle can mirror these incentives, but requires information not usually available to those in charge of the intervention. Regulators are also subject, by design, to political influence.