Despite the scepticism raised by the German Monopoly Commission our analysis shows that the revised theory of contestable markets can be applied to the telecommunications market better than expected. The original contestable market theory implied three assumptions necessary to be satisfied to...

According to European directives the German state deregulated several sectors which had been protected monopolies for a long time. A regulatory authority was established for the telecommunication sector with the competence to decide about the access conditions to the bottleneck "local loop". If...