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Monday, August 30, 2004

Predation: Some Comments
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After The Wall Street Journal editorial today on predation (shameless self-promoting moment has now passed), I have received a couple of comments about how prevalent predatory pricing schemes are in telecommunications.

This is news to me. But let me reiterate the bottom-line of Adam Peters' and my paper: the recoupment phase of a predatory scheme is damn-near impossible to pull-off in communications markets and, indeed, impossible to pull-off with the pervasive mandatory unbundling that now exists. Furthermore, even if you are the most paranoid, Harvard-school antitrust devotee, the remoteness of the predatory threat is dwarfed by the harm that pervasive retail price regulation causes in the name of protecting against predation.

The schizophrenia of the regulatory mindset is simply astounding at times. First, legacy regulatory roles exist because without them prices will be too high; at the same time, they exist because, without regulation, prices will be too low. Which is it?

posted by Ray Gifford @ 4:04 PM | General

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