1. Gabel and Kennet (1994) also demonstrate that there are slight diseconomies of scope between switched services and private-line services. A private line between two locations is always connected: the local network operator dedicates circuits exclusively to ensure that the connection is continuous. What are the implications of their finding of diseconomies of scope between private lines and switched-access services for new entry into local exchange markets?
2. What other factors mitigate the dangers of nonperformance in sequential trading relationships besides contracts?