This paper evaluates the effectiveness of several pricing rules intended to promote entry into a network industry dominated by an incumbent carrier. Drawing on the work of Cournot and Hotelling, we develop a model of competition between two interconnected networks.

We analyze two and three-dimensional variants of Hostelling's model of differentiated products. In our setup, consumers can place different importance on each product attribute; this is measured by a weight in the disutility of distance in each dimension.

The remainder of this reply will proceed as follow: Section II will again lay out the simple intuition of the ECPR. Section III will reprise our model and its insights. section IV wil summerize Larson's critique. Section V will provide our response. Section IV will address some global issues...