32 Antitrust Bull. 741 (1987)
Why Regulated Firms Should Be Kept Out of Unregulated Markets: Understanding the Divestiture in United States v. AT&(and)T

handle is hein.journals/antibull32 and id is 743 raw text is: The Antitrust Bulletin/Fall 1987

Why regulated firms should be
kept out of unregulated markets:
understanding the divestiture
in United States v. AT&T
BY TIMOTHY J. BRENNAN'
The purpose of this article is to provide the economic theory
behind the divestiture of the local telephone operating companies
achieved in the settlement of United States v. AT&T,2 and the
subsequent restrictions of local telephone companies' entry into
other markets. The article begins by setting out the restrictions in
some detail, observing that by limiting local telephone participa-
tion in other markets they are counterproductive at first glance.
They can be understood, however, by looking at the predictable
consequences from entry by regulated monopolists into unregu-
I Associate Professor, Telecommunications Policy and Economics,
George Washington University. This research was carried out while the
author was an economist with the Antitrust Division, U.S. Department
of Justice. The opinions expressed here are solely those of the author
and not necessarily those of the Department. The suggestions of
Michael Williams, Robert McGuckin, Mary Fitzpatrick, Marius
Schwartz, and Albert Smiley are gratefully acknowledged. Of course,
the author retains responsibility for all errors.
2 See United States v. American Telephone & Telegraph Co., 552 F.
Supp. 131 (1962) [hereinafter cited as Divestiture Decision].

c9 1987 by Federal Legal Publications, Inc.

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