Innovation, Investment and Unbundling

  • Jorde T
  • Sidak J
  • Teece D
  • 14


    Mendeley users who have this article in their library.
  • N/A


    Citations of this article.


In this Article, we examine the neglected tradeoff between innovation and mandatory unbundling of telecommunications networks. Our analysis is prompted by the Supreme Court's 1999 decision in AT&T Corp. v. Iowa Utilities Board and by the Federal Communications Commission's Second Further Notice of Proposed Rulemaking released later the same year, which address which network elements in the local telecommunications network shall be subject to compulsory sharing among competitors at regulated cost-based rates. Economic analysis indicates that mandatory unbundling at prices computed on the basis of the total element long-run incremental cost of the various network elements belonging to an incumbent local exchange carrier will adversely affect the ILEC's incentives not only to upgrade or maintain existing facilities, but also to invest in new facilities. Mandatory unbundling at TELRIC prices will also encourage competitive local exchange carriers to deviate from the socially optimal level of investment and entry. Finally, the confluence of mandatory unbundling and other FCC policies aggravates the distortion of investment decisions.

Author-supplied keywords

  • K0
  • K2
  • L4
  • L5
  • L9
  • L96

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document


  • Thomas Jorde

  • J. Gregory Sidak

  • David Teece

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free