s complexity. Mandated access puts stress on network capacity that requires networks to rethink their design. If the system has substantial excess capacity, then mandated access may not require the regulated firm to reconfigure its network. However, if mandated access adds sufficient demand relative to the capacity of the system or substantially changes See U.S. Canada Power System Outage Task Force (2004). Economic Effects of Regulating Access to Networks traffic patterns, the regulated firm may need to invest in additional capacity and to reconfigure the network. Mandated access also creates substantial transaction costs for networks, for which cost-based regulation often does not account. Compliance with regulations mandating retail, wholesale, unbundled, platform, and interconnection access entails different transaction costs for each. Regulators should take such transac- tion costs into account in evaluating the total costs of access and include them in the costs of establishing and operating networks. Network firms are able to address problems of determining network capac- ity and configuration through market mechanisms. The size and configuration of networks will reflect the supply and demand for network capacity and related ser- vices. Moreover, the extent to which networks are vertically integrated will reflect the transaction costs of networks. The complexity of network design suggests that regulators should exercise forbearance and leave these problems to market mecha- nisms. Mandated access will bias market mechanisms in the selection of inefficient network capacity and design. A. Classifying Types of Access to Networks Access to networks refers to physical connections that are external to the network and mediated by market transactions. We classify different types of access in terms of the type of entity to whom access is provided (e.g., customers, competitors, or suppliers of complementary products and services), as well as the specific network facilities to which access is provided; see Chapter 1. 