Regulation and Its Reform

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Harvard University Press, 1982 - Law - 472 pages
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This book will become the bible of regulatory reform. No broad, authoritative treatment of the subject has been available for many years except for Alfred Kahn's Economics of Regulation (197O). And Stephen Breyer's book is not merely a utilitarian analysis or a legal discussion of procedures; it employs the widest possible perspective to survey the full implications of government regulation‚e"economic, legal, administrative, political‚e"while addressing the complex problems of administering regulatory agencies.

Only a scholar with Judge Breyer's practical experience as chief counsel to the Senate Judiciary Committee could have accomplished this task. He develops an ingenious original system for classifying regulatory activities according to the kinds of problems that have called for, or have seemed to call for, regulation; he then examines how well or poorly various regulatory regimes remedy these market defects. This enables him to organize an enormous amount of material in a coherent way, and to make significant and useful generalizations about real-world problems.

Among the regulatory areas he considers are health and safety; environmental pollution, trucking, airlines, natural gas, public utilities, and telecommunications. He further gives attention to related topics such as cost-of-service ratemaking, safety standards, antitrust, and property rights. Clearly this is a book whose time is here‚e"a veritable how-to-do-it book for administration deregulators, legislators, and the judiciary; and because it is comprehensive and superbly organized, with a wealth of highly detailed examples, it is practical for use in law schools and in courses on economics and political science.

 

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Contents

Typical Justifications for Regulation
15
Objections to the Traditional Economic Rationale
16
Additional Bases for Regulation
19
Rent Control or Excess Profits
21
Compensating for Spillovers Externalities
23
Objections to the Classical Rationale
24
A Caveat
26
The Classical Rationale for Regulation
27
Match and Mismatch
191
Mismatch Excessive Competition and Airline Regulation
197
The Industry
198
Regulation
199
Harmful Effects of Regulation
200
Mismatch as Cause
209
Price Regulation
210
Route Awards
213

Criticisms of the Rationale
28
The Empty Box
29
Current Use
30
Other Justifications
32
The Mixture of Rationales
34
CostofService Ratemaking
36
The Problems
37
Determining the Rate Base
38
Determining the Rate of Return
40
Efficiency
47
The Test Year
50
Rate Structure
51
Conclusion
58
Historically Based Price Regulation
60
The Problems
62
Categorization
63
CostofService Ratemaking
64
Allocation
66
Enforcement
68
New Investment
69
Conclusion
70
Allocation under a Public Interest Standard
71
The System
72
Problems
74
What Is to Be Allocated?
75
The Selection Process
78
The Renewal Process
89
Conclusion
94
Standard Setting
96
The System
98
The Procedural Background
99
The StandardSetting Process
101
Problems Inherent in the Process
109
Enforcement
112
Anticompetitive Effects
115
Judicial Review
116
Conclusion
118
Historically Based Allocation
120
The Need for Exceptions
122
The Exception Process
127
Conclusion
130
Individualized Screening
131
The Food Additive Screening System
133
Problems with This Form of Regulation
135
Developing a Test for Risk
136
The Use of Experts
141
Calculating and Weighing Benefits
147
Varying Standards of Selection
153
Conclusion
155
Alternatives to Classical Regulation
156
Disclosure
161
Taxes
164
The Creation of Marketable Property Rights
171
Changes in Liability Rules
174
Bargaining
177
Nationalization
181
General Guidelines for Policy Makers
184
Appropriate Solutions
189
Efficiency
217
The Effort to Regulate Schedules
218
An Alternative to Classical Regulation
219
Conclusion
220
Mismatch Excessive Competition and the Trucking Industry
222
The Effects of Regulation
227
Alternatives to Classical Regulation
234
Conclusion
238
Mismatch Rent Control and Natural Gas Field Prices
240
The Industry
241
Regulation
242
Adverse Effects
244
The Mismatch and the Shortage
247
FirmbyFirm CostofService Ratemaking
248
Areawide CostofService Ratemaking
250
The Mismatch and Natural Gas Allocation
253
Public Interest Allocation
257
Negotiation
258
Conclusion
260
Partial Mismatch Spillovers and Environmental Pollution
261
The Problems of Standard Setting
263
Taxes and Marketable Rights
271
A More Practical Comparison
275
Conclusion
284
Problems of a Possible Match Natural Monopoly and Telecommunications
285
The Characteristics of the Longline Problem
288
The Industry and the Service
290
Regulation and Joint Costs
293
The Entry of Competition into LongDistance Telecommunications
299
The FCCs Response to the Problem
301
Specialized Common Carriers SCCs
302
Special Rates
303
Docket 18128
305
Expanding the Area of Competition
308
The Basic Choices
311
Conclusion
314
Practical Reform
315
From Candidate to Reform
317
The Kennedy Hearings
321
Preparation
323
The Actual Hearings
327
Conclusion
339
Generic Approaches to Regulatory Reform
341
Better Personnel
342
Procedural Changes
345
Fairness and Efficiency
346
Legitimacy
350
Structural Change
354
Supervisory Proposals
357
New Institutions
361
Encouraging Substantive Reform
363
Encouraging StepbyStep Reform
365
The Regulatory Agencies
371
A Note on Administrative Law
378
Further Reading
382
Notes
386
Index
462
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About the author (1982)

Stephen Breyer is Associate Justice of the Supreme Court of the United States.

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