This paper discusses the interaction between competition and price regulation in telecommunications markets. First, we discuss how to achieve efficient entry when an incumbent's regulated retail prices are out of line with its costs. Second, the analysis is extended to the case where entrants need to purchase network services from the incumbent. Except in the extreme case where entrants have no alternative but to use the incumbent's network to provide their own services, I argue that (i) retail instruments should be used to combat retail-level distortions such as universal service obligations, and (ii) network access charges should be equal to the incumbent's cost of access (excluding opportunity costs) in order to achieve productive efficiency.

This paper studies competition between firms when consumers observe a private signal of their preferences over products. Within the class of signal structures that induce pure-strategy pricing equilibria, we derive signal structures that are optimal for firms and those that are optimal for consumers. The firm-optimal policy amplifies underlying product differentiation, thereby relaxing competition, while ensuring consumers purchase their preferred product, thereby maximizing total welfare. The consumer-optimal policy dampens differentiation, which intensifies competition, but induces some consumers to buy their less preferred product. Our analysis sheds light on the limits to competition when the information possessed by consumers can be designed flexibly.