ors limit the network firm's ability to ration access to capacity. Thus, if competitors have wholesale or unbundled access to network services without sufficient price rationing by the network firm, congestion effects that resemble externalities can occur. An extreme example is the granting of interconnection access to Internet service providers at a zero price. Presumably, there are ways that the network firm could negotiate access limits with its competitors if it were not prevented from doing SO by regulation. Coase (1960) emphasized that without substantial transaction costs, parties can bargain to achieve efficient levels of an externality. Coase emphasized that this would be possible regardless of the initial assignment of property rights. Depending on the initial assignment of rights, the polluter would compensate the victim for pollution or the victim would bribe the polluter to reduce pollution. In principle, the network firm could attempt to pay competitors to reduce their access if congestion costs became too high, although such payments might be prohibitively costly. Also, such payments are impractical because they would encourage further entry of competitive local exchange carriers (CLECs), new entrants in the deregulated local exchange markets, and lead to further usage and congestion. 1. Blocked Calls There are many aspects of the quality of service provided by a network. One important measure of quality is the waiting time to obtain service. For a telecom- munications system, this could be represented by the average waiting time in a queue before initiating a communication. For data networks, this approach could be applied to study the total time of service, which is the waiting time plus the time for completion of transmission. For our purpose, it is sufficient to consider only the waiting time in a queue to show the effects of quality of service on demand. Examples of waiting in a queue are the delay in connecting by phone to an Internet service provider or to a service call center and the avera