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51 Stan. L. Rev. 1249 (1998-1999)
The Bell Doctrine: Applications in Telecommunications, Electricity, and Other Network Industries

handle is hein.journals/stflr51 and id is 1261 raw text is: The Bell Doctrine: Applications in Telecommunications, Electricity, and Other Network Industries Paul L. Joskow* and Roger G. Noll** In this article, Professors Paul Joskow and Roger Noll examine Professor Baxter's most visible contribution to antitrust policy: the Bell Doctrine. The Bell Doctrine, so named because it underpins the 1983 break up ofAT&T into the Baby Bells, can theoretically be applied to other network industries where regulated monopolies control both monopoly segments and potentially com- petitive segments of the industry. The primary purpose of the article is to ex- amine the economic theory of the Bell Doctrine and to evaluate the current ap- plicability of the Bell Doctrine in light of changes that have taken place in regulated infrastructure industries. After describing the development of the Bell Doctrine and reviewing its application in the US telecommunications in- dustry, the authors survey reforms in other industries and in other countries. The recent reforms in the electric power industry are closely examined as a case study. Professors Joskow and Noll conclude that the Bell Doctrine contin- ues to dominate the policy analysis of reforms in network industries across the globe, even if easy application of the Bell Doctrine's principles and proposed remedies is no longer possible. William Baxter's contributions to antitrust analysis and policy are nu- merous and impressive, but none is more visible than the divestiture of the American Telephone and Telegraph Company (AT&T) in the settlement that terminated United States v. AT&T1 The fundamental theory underpinning the Modification of Final Judgement (MFJ), a theory named the Bell Doc- trine by Professor Baxter,2 is that regulated monopolies have the incentive * Elizabeth and James Killian Professor of Economics and Management, Department of Eco- nomics, Massachusetts Institute of Technology. Joskow thanks the MIT Center for Energy and Environmental Policy Research for support of his work on electricity and natural gas policy. ** Morris M. Doyle Centennial Professor of Public Policy, Department of Economics, Stan- ford University. Noll thanks the Markle Foundation for support of his research in telecommunica- tions policy. 1. The settlement actually was filed as United States v. Western Electric Co., 569 F. Supp. 990 (D.D.C. 1983), which modified the 1956 settlement of United States v. Western Electric Co., 1956 Trade Cas. (CCH) 68,246 (D.N.J. 1956), and so has come to be known as the Modification of Final Judgement, or MFJ. 2. The core elements of this theory are explained in William F. Baxter, Conditions Creating Antitrust Concerns with Vertical Integration by Regulated Industries- 'For Whom the Bell Doctrine 1249

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