e transaction costs by facilitating compatibility between complementary products. Allowing multiple networks and allowing network technologies to shift too rapidly can also give rise to significant transaction costs, because production of new technological platforms and adaptation of existing network infrastructure to incorporate innovations can be quite costly (Bresnahan 1999). Accordingly, some delay in the introduction of new products may reflect efficiency, not market fail- ure. Absent a compelling reason to believe that network externalities are causing efficiency losses that the market cannot properly redress, regulations designed to counteract network economic effects cannot be justified. The fact that markets seem fully capable of resolving most of the supposed market failures identified by the theoretical literature on network economics sug- gests that any attempt to remedy these supposed problems should be approached with considerable caution. Indeed, it would seem appropriate to insist on empirical 25 The fear of being held up after committing to a network might make consumers reluctant to join proprietary networks. Katz and Shapiro (1994) describe a number of ways that a network owner can allay such fears. 26 Price discrimination helps internalize potential benefits, although price discrimination is not a necessary condition for such internalization. Price discrimination is consistent with competition and thus does not require monopoly providers of network services. 27 See Katz and Shapiro (1992); Shapiro (1995); Liebowitz and Margolis (1996); and Spulber (2008b). Networks in Telecommunications proof that such problems actually exist before authorizing governmental action to redress them. Proponents of network externality theories have yet to offer any systematic evidence to support their theories. Instead, most of these theorists have opted to invoke a handful of well-known anecdotes concerning supposed technol- ogy lock-in, such as the persistence of the traditional typewriter keyboard layout (commo