The Causes and Effects of Deregulation, Volume I and II.

AuthorDahl, Carol A.

The Causes and Effects of Deregulation, Volume I and II, by PAUL W. MACAVOY AND RICHARD SCHMALENSEE (An Elgar Research Collection, International Library of Critical Writings in Economics, 2014) Volume I 605 pages, Volume II 840 pages. ISBN 9781 78100 692 4 (2 volume set).

This two volume set of articles, many of them now classics, gives a very nice overview of regulation and deregulation in the U.S. The original publication dates for the 41 reprinted articles span more than 4 decades (1968-2013). They are included in an introductory section plus seven additional sections each covering regulation and deregulation for one of seven industries (railroads, trucking, airlines, natural gas, telecommunications, electricity, cable television). Although it took me awhile to get through all the material (4-7 articles per section), I appreciated the depth and breadth of coverage and feel wiser if not older for having met the challenge.

Only about one third of the material in the two volumes directly covers energy industries (natural gas and electricity), both in volume II. About another ten percent in the introductory section should be of interest to many EJ readers as well as others. Given the railroad's intimate relationship to coal, the seven percent relating to railroad deregulation might be of interest to many interested in energy economics. Although the rest of the cases are more peripheral, I found some lessons in the deregulations in other sectors as well: the plunge in profits and bankruptcies in trucking, which probably should never have been regulated; the reduction in prices and costs and improvement in service for airlines, which the editors note were not exceptionally profitable under regulation; the role of the courts and technology in telephone deregulation; the kaleidoscope of events in cable vision in regulating, deregulating, and reregulating only to deregulate again by various actors including congress, states, and regulatory agencies. For both telecommunications and cable the role of technology and competition between them is also a continuing plot worth following.

Although I enjoyed both volumes even the sections without any direct energy connection, I especially liked the four introductory chapters outlining regulatory theory from the classic notion that regulation is to serve the public interest, to regulation is to serve the regulated industries, to the somewhat newer political theories that regulation is the result of the interplay of group interests in the political process. These theories provide a framework for the question: "Why regulate?" as well as "Why deregulate?" and the editors have sought out studies that attempt to prove or disprove these points for each industry.

The editors note that U.S. Federal regulation began in 1887 with Act to Regulate Commerce in 1887 and the formation of the Interstate Commerce Commission. The government extended its reach into select industries thereafter for more than 9 decades. However, the winds of change began to blow in the late 60s when the Department of Justice...

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