promotion.Buthowdodi erentalliancescompete?Andwhatdetermineswhichalliancetojoin?Iseconomicwelfareenhancedbystrategicalliances?Theseremainopenforfutureresearch.

Theanalysiscanbeextendedtostudyotherindustrieswhereeconomiesofnet-worksizearesigni cant.Forinstance,thenetworkpatternintheexpresspackagedeliveryindustryintheU.S.ismainlycharacterizedbyhub-spokenetworks.Theissueofinterconnectingnetworksownedbydi erent rmsalsoarisesinthisindustryaswellasinmail,Internet,andtelecommunicationindustries.

3.2.InterconnectioninTelecommunications.Countrieshaveregulationsthatlimittheoperationsofforeignoperators.Thisisparticularlytrueinthecaseofinternationaltelecommunications.Fixedandsunkcostsofbuildinganetwork(orinfrastructure)aresigni cant;andbuildingoverlappingnetworksisnotcost-e ectivefor rmsandnotsociallydesirable.Consequently,telecommunicationnetworksinmanycountriesnowadaysaremadeofamyriadofseparatelyownednetworks.Mostnetworksareinterconnectedtoformanetworkofnetworks,whichalsoenablescom-municationamongpeoplebelongingtodi erentnetworks.Technologicaladvancesandgovernmentderegulationpolicies,particularlynetworkaccessandinterconnec-tionpolicies,havemadeinterconnectionsofthesenetworksandaccessprovisionpossible.

Accesstoanothernetworkisacriticalinputtoo ercompetitiveservicesto nalconsumers.Theprovisionofaccessisalsoawaytosolvethenetworkexternality,whicharisesbecausecallersandreceiversneednotbewithinthesamenetwork.Bybuyingaccesstoanexistingnetwork,entrantsdonothavetobuildasimilarnetwork.Thisreducesentrybarriers.However,theaccesschargeisnotalwayspro-competitiveorneutral.Forexample,largenetworkoperatorsmayusehighaccesschargetoexcludesmallones;andsymmetricnetworkoperatorsmaysustainretailcollusionthroughanappropriatechoiceofaccesschargestoeachother.Mostoftherecentstudiesarecenteredaroundtheinteractionamongaccesscharge,marketstructureandretailcompetition.

SettlementRatesinInternationalTelecommunications.Historically,two-wayaccessstartedwiththeinternationaltelephoneservice.Theaccesscharge(perminute)inthisscenarioiscalledthesettlementrate.Itisgenerallydeterminedthroughcarriers’negotiationundervariousrestrictionssetbygovernments.Thebottleneck(terminatingcalls)ofacountry’snetworkusedtobeownedbyanationalmonopolisticcarrier,andisstillthecaseinmanycountries.CarterandWright(1994),amongothers,formallystudysettlementagreementsbetweentwonationalmonopolisticnetworks.Eachmonopolistprovidesinternationalcallservicesinone