2). The direct link between regula- tion and industry performance makes understanding the economic implications of current regulatory policy all the more imperative. B. A Fundamental Shift in Regulatory Policy The need for a more sophisticated understanding of networks has been made all the more critical by a fundamental shift in the basic approach to regulating networks. For over a century, policy makers charged with regulating networks relied almost Introduction exclusively on the set of tools associated with rate regulation, in which regulatory authorities used tariffs to dictate the prices that network owners could charge end customers for network services. Because rate regulation targeted final goods that represented the output of the entire system, this approach did not require much of a theory of how networks are configured or how the various network components interact with one another. In recent years, however, regulators have begun to turn to a new approach, known as access regulation. Unlike rate regulation, where regulators focus on the prices that network owners charge for the services of the entire network, access regulation dictates the terms under which network owners must allow customers, partners, other network firms, and even competitors to use portions of their net- works. In short, rather than following the approach dictated by rate regulation and controlling the terms under which consumers purchase access to outputs, access regulation instead controls the terms under which competitors may purchase access to inputs. This shift in regulatory approach is exemplified by the Telecommunica- tions Act of 1996, which attempted to introduce competition into local telephone service by potentially compelling incumbent local telephone companies to pro- vide competitors with unbundled access to every element of their networks. Access requirements are also being implemented with respect to cable television systems, networks of utility poles, and broadband technologies. Some scholars have even sug- gested 