es. It is for these reasons that even supporters of network externality theories caution that governmental intervention might well make the problem worse, not better (Katz and Shapiro 1994; Bresnahan 1999). 3. Vertical Exclusion Technological and theoretical developments have also substantially undercut the plausibility of basing regulation on the dangers posed by vertical exclusion. The same forces that are increasing the competitiveness of every portion of the telecom- munications industry are eliminating the plausibility that any network provider will have a dominant market position to use as leverage over an adjacent market. At the same time, the conventional wisdom with respect to vertical integration has undergone a sea change over the past half century. Although economic theo- rists during the 1950s and 1960s were quite hostile toward vertical integration and Networks in Telecommunications vertical contractual restraints (such as exclusive dealing and long-term contracts) that were tantamount to the same thing, vertical integration is now generally rec- ognized to be less problematic than previously believed. 28 On the contrary, it can often be quite economically beneficial. The driving force behind this transformation is the emergence of the so-called "one-monopoly-rent theorem," which holds that monopolists have little, if any, in- centive to engage in vertical exclusion. Because there is only one monopoly profit available in any vertical chain of production, a monopolist can capture all of that profit without having to resort to vertical integration simply by charging the monopoly price (for the seminal statements, see Director and Levi 1956; Bowman 1957). A simple numerical example, based on a classic opinion written by then-Chief Judge Stephen Breyer,29 illustrates the intuitions underlying the one-monopoly- rent theorem. Suppose that a firm with a monopoly over refining ore into copper ingots sells its output into a competitive market in which firms fabricate the ingot into copper pipe. Suppose furth