t intervention is likely to improve matters or make them worse. 15 Under rate regulation, the traditional governmental response to market failure, regulators explic- itly prohibit competitors from entering the market. Although access regulation does not involve any de jure prohibition of market entry, it can forestall the emergence of facility-based competi- tion to existing networks by rescuing users from having to invest alternative capacity. Economic Effects of Regulating Access to Networks Consider, for example, the particular regulatory decisions associated with any state-sponsored attempt to solve the problems of technological lock-in. Concerns about externalities are inappropriate in the context of a physical network that can be owned. As discussed in Chapter 4, even if customers cannot internalize all of the benefits of their technology adoption decisions, the network owner is in a position to do SO through introductory pricing discounts and other inducements. Such intervention would also necessarily require the government to replace clear winners in the technology marketplace with what it believed to be the superior technology. Moreover, in order to be effective, the government must intervene at an early stage in the technology's development, when making such determinations is most difficult. Regulators typically would have to assess technological superiority on the basis of extremely thin information that in most cases would be provided by parties with a direct interest in the outcome of the regulatory process. In addition, decision makers would have to insulate themselves from the types of systematic biases traditionally associated with political decision making (Yoo 2002). Thus, even supporters of network externality theories caution that government intervention might well make the problem worse instead of better (Katz and Shapiro 1994; Bresnahan 1999). In short, there is ample reason to be skeptical of claims that network economic effects will cause widespread market failure in network industries. No