reduce the risks asso- ciated with nonrecoverable expenditures, including contracting with customers before making irreversible investments and entering into joint ventures or mergers with incumbents. Furthermore, in competitive markets, duplication of invest- ment often occurs. The entry of excess or insufficient capacity can take place as a consequence of uncertainty regarding costs, technology, or market demand. Tem- porary overcapacity is part of the competitive process and certainly does not indicate the presence of market failure. Indeed, periods of excess capacity, often observed in a variety of industries, demonstrate that sunk costs are unlikely to deter vigorous competition. The same reasoning applies to the telecommunications industry in the absence of regulatory intervention that favors or penalizes incumbents. Technological change further mutes the impact of sunk costs on entrants. Entrants commit capital resources in those markets or market segments in which they expect to earn competitive returns on their investments. The sunk costs involved in establishing a telecommunications system, given currently available technologies, are no different from irreversible investments in any other compet- itive market. Concern over sunk costs in telecommunications may be due to the substantial level of investment needed to establish a traditional telecommunications network, and in particular to the ubiquity of the regulated Bell System monopoly. 13 On the view that sunk costs constitute a barrier to entry, see Baumol and Willig (1981); Baumol et al. (1982); see also Goldberg (1976) arguing that sunk costs justify regulatory intervention. For the argument that sunk costs create a barrier to entry in the telecommunications industry, see United States V. W. Elec. Co., 673 F. Supp. 525, 538 (D.D.C. 1987), aff'd in part, rev'd in part, 900 F.2d 283 (D.C. Cir. 1990); Hausman (1995). But see Kaserman and Mayo (2002) criticizing Hausman's conclusions. Verizon Commc'ns Inc. V. FCC, 535 U.S. 467, 546-47 (2002). Baumol and