The Economics of Regulation: Principles and Institutions, Volume 1

Alfred E. Kahn

MIT Press, Jun 22, 1988 - Business & Economics - 616 pages

As Chairman of the Civil Aeronautics Board in the late 1970s, Alfred E. Kahn presided over the deregulation of the airlines and his book, published earlier in that decade, presented the first comprehensive integration of the economic theory and institutional practice of economic regulation. In his lengthy new introduction to this edition Kahn surveys and analyzes the deregulation revolution that has not only swept the airlines but has transformed American public utilities and private industries generally over the past seventeen years. While attitudes toward regulation have changed several times in the intervening years and government regulation has waxed and waned, the question of whether to regulate more or to regulate less is a topic of constant debate, one that The Economics of Regulation addresses incisively. It clearly remains the standard work in the field, a starting point and reference tool for anyone working in regulation.Kahn points out that while dramatic changes have come about in the structurally competitive industries - the airlines, trucking, stock exchange brokerage services, railroads, buses, cable television, oil and natural gas - the consensus about the desirability and necessity for regulated monopoly in public utilities has likewise been dissolving, under the burdens of inflation, fuel crises, and the traumatic experience with nuclear plants. Kahn reviews and assesses the changes in both areas: he is particularly frank in his appraisal of the effect of deregulation on the airlines. His conclusion today mirrors that of his original, seminal work - that different industries need different mixes of institutional arrangements that cannot be decided on the basis of ideology.

Contents

• The Distinction in Practice: 8
• The Limited Attention to Quality of Service: 21
• Determination of the Rate Base: 35
• Regulating Rate Structures: 54
• 3: 63
• Problems of Defining Marginal Cost: 70
• Tempering Principle with Practicalityor One Principle with Another: 83
• Peak Responsibility: 89
• The Appropriate Time Pattern of Rates: 103
• Reproduction versus Original Capital Costs: 109
• 5: 118
• Implications and Solutions: 130
• Principles of Discrimination: 137
• Fully Distributed Costs: 150
• 6: 157
• The Impact on Competition at the Secondary Level: 166
• Impact at the Primary Level and Other Institutional Considerations: 175
• Practicability Externalities SecondBest: 182
• Noneconomic Considerations: 189
• The Problem of Second Best: 195
• Protectionism and Conservatism: 11
• The Problems Created by Exempt Carriers 18: 18
• The Orientation of Regulatory Policy 24: 24
• Community Antenna Television 32: 32
• A Few Warning Notes 46: 46
• Incentive Plans: 59
• Electric Power 70: 70
• Regulatory Planning 77: 77
• The Adjudicatory Role and Its Consequences 86: 86
• The Inherent Limitations of Regulation 93: 93
• Internal Motivations 101: 101
• The Role of Regulation 108: 108
• Economics of Scale 116: 117
• Competitive Certification versus Centralized Planning: 126
• Cases 132: 132
• Destructive Competition and the Quality of Service 172: 172
• The Theory Applied 178: 178
• Stock Exchange Brokerage Commissions 193: 193
• The Issue of CreamSkimming: 220
• Integration: 251
• Intercompany Coordination: 307
• 7: 320
• The Choice among Imperfect Systems: 327
• Index Volumes I and II: 345

About the author

Alfred E. Kahn (1917-2010) was Robert Julius Thorne Professor of Political Economy at Cornell University and Special Consultant to National Economic Research Associates.

Bibliographic information

• Title: The Economics of Regulation: Principles and Institutions, Volume 1; Mit Press
• Author: Alfred E. Kahn
• Edition: illustrated, reprint
• Publisher: MIT Press, 1988
• ISBN: 0262610523, 9780262610520
• Length: 616 pages
• Subjects: Business & Economics / Economics / General