ond, the network owner can simply refuse to meet the excess demand by limiting the service provided to existing customers and by turn- ing away new customers. A retail access mandate prevents a network owner from employing this solution. Third, the network owner can increase retail price, which will reduce quantity demanded along the demand curve until it no longer exceeds network capacity. To the extent that the network is subject to price controls that typ- ically accompany a retail access mandate, this solution is also foreclosed. Fourth, the network owner can restore equilibrium by degrading the quality of service. This will cause the demand curve to shift backward until demand is brought back into bal- ance with network capacity. Although relatively unpalatable, the presence of a retail access mandate may make degradation of quality the only viable short-run option. A rational network owner faced with the infeasibility and unattractiveness of the four alternatives described above will be forced to carry excess capacity to guard against the possibility that it will gain new customers unexpectedly if its competitors fail. In effect, retail access forces the network to carry capacity as insurance against failure by its competitors, with the premium for that insurance being paid by the network's customers (Sidak and Spulber 1997a). The resulting deviation from the optimal network configuration inevitably results in an increase in cost. Subjecting the network to the price controls associated with retail access also has the effect of reducing incentives for upgrading the existing network and for others to build out alternative network capacity. Antitrust as Applied to Network Industries Retail access can also increase transaction costs by forcing network owners to gather and format the information necessary to preannounce and preclear all of their service offerings. The tariff process also imposes delays in service innovation and requires carriers to bear the costs of defending their tariff filings against challen