The Effect of Entry on Profit Margins in the Short and Long Run

The present progress in the information processing technology is having a drastic impact on the telecommunications industry and on many public networks by creating a separation between two components: on the one hand, the network made up of the infrastructures; on the other hand, the command networks which monitor the former and use it as a support for the provision of differentiated services. Whereas the network of infrastructures is a natural monopoly which should however be disciplined through the threat of potential competition, the command networks are likely to be offereed in a competitive market; the latter should nevertheless be organized, if not planned, due to externalities such as security and interoperability.