nt boundary of a network firm is determined by tradeoff between costs of controlling the network within an organization and transaction costs of market coordination. The goal of regulatory policy should be to realize efficiencies in the formation of networks and the organization of network firms. Our main proposition also provides guidance for merger policies toward networks. To the extent that markets realize efficient ownership structures and network design, regulatory and antitrust forbearance are called for. Public policy in the network industries, particularly compelled access, should be chosen carefully to avoid creating incentives to form inefficient networks and to allow firms to form efficient networks. The Design and Costs of Networks How do network owners make decisions about network creation and configuration? This question is critical for public policy, particularly compelled access to networks. The answer is more complex than it might appear at first blush. First and foremost, private companies create networks by designing network architecture and investing in network facilities. Second, private companies create larger networks by intercon- necting with other networks through contracts and physical facilities. Third, con- sumers help to shape networks by decisions about what types of network services to purchase. Fourth, suppliers of complementary services affect networks by the types of products they invent and sell. Thus, networks come from supply decisions by net- work providers, interconnection between networks, demand decisions by network customers, and supply decisions by providers of complementary services. The regulatory actions of public policymakers can have a significant impact on supply, demand, vertical integration, and access decisions. The law of unin- tended consequences can make these impacts difficult to predict. Regulations that constrain access prices below market rates or compel access reduce incentives to invest in network facilities, while at the same time stimulating demand f