The United States Congress recently enacted sweeping legislation to overhaul the rules governing competition in telecommunications services. The Telecommunications Act of 1996 (see Congressional Record, 1996) is the first major rewrite of the Communications Act of 1934. It also supersedes the...

We extend the analysis of monopoly third-degree price discrimination to the empirically important case where marginal costs also differ between markets. Differential pricing then reallocates output to the lower-cost markets, hence welfare can increase even if total output does not, unlike under...

This paper analyzes, in a simple duopoly model, the welfare effects of investments that reduce marginal cost and, thus, lead the investing firm to expand output and the rival to contract or exit altogether. It shows why welfare can decrease even if price falls and even if the investment is...