We present a model featuring irreversible investment, economies of scale, uncertain future demand and capital prices, and a regulator who sets the firm’s output price according to the cost structure of a hypothetical replacement firm. We show that a replacement firm has a fundamental cost...

This paper explores the implications of Internet peering in the context of a model of competing, vertically integrated Internet Access Providers. We show that if regulation forbids settlement payments between firms, there will be under-investment in capacity and under-pricing of usage, both of...

This paper models settlement arrangements between international telecommunication carriers. The FCC in the United States claims these arrangements cost United States consumers billions of dollars annually, largely to subsidize foreign carriers in low-income countries. A model is given which...