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Regulation redux by.
| Content Provider | CiteSeerX |
|---|---|
| Author | Crew, Michael A. Kleindorfer, Paul R. |
| Abstract | this paper we argue that this change of opinion is not surprising given the flawed nature of deregulation. The emperor may have had no clothes, but it took economists, including us, a long time to realize it. In this paper we analyze the nature of deregulation. We attempt to provide motivation and a basis for deregulation. One implication of our definition of and approach to deregulation, if accepted, is that the likely gains from deregulation are much less than proponents have previously argued. In addition, it could provide a way forward to achieving some of the potential gains from deregulation. We start in section 1 with the background and motivation for our study of deregulation. It utilizes the rent-seeking insight of Tullock (1967). It reveals the basic flaw in deregulation -- unwillingness on the part of the public and regulators to give up the benefits of regulation. Section 2 develops our proposed approach to deregulation including a model of deregulation and an evaluation of its efficiency consequences. Section 3 discusses the implications for a number of industries and indicates that, while there are some underlying principles, one size does not fit all. Section 4 is by way of summary, conclusions and implications. 1. Rent Seeking, Driver of Deregulation A major problem of the deregulation movement is that its foundations were logically weak, especially the many claims that it would improve efficiency. They were strongly grounded in self-interest but this in itself, as Adam Smith implied long ago, is not going to lead to an efficient outcome in the absence of competition. In the case of a monopoly that exists because of government policy abolishing it and going to competition would generally be welfare enhancing as long as no significant scale economies are... |
| File Format | |
| Access Restriction | Open |
| Subject Keyword | Regulation Redux Deregulation Major Problem Rent-seeking Insight Adam Smith Basic Flaw Significant Scale Economy Many Claim Likely Gain Potential Gain Government Policy Efficiency Consequence Deregulation Movement Flawed Nature Efficient Outcome Underlying Principle Deregulation Unwillingness Rent Seeking Long Time |
| Content Type | Text |
| Resource Type | Article |
