The Economics of Regulation
By:Alfred Edward Kahn
Published on 1988 by MIT Press
As Chairman of the Civil Aeronautics Board in the late 1970s, Alfred E. Kahn presidedover the deregulation of the airlines and his book, published earlier in that decade, presented thefirst comprehensive integration of the economic theory and institutional practice of economicregulation. In his lengthy new introduction to this edition Kahn surveys and analyzes thederegulation revolution that has not only swept the airlines but has transformed American publicutilities and private industries generally over the past seventeen years.While attitudes towardregulation have changed several times in the intervening years and government regulation has waxedand waned, the question of whether to regulate more or to regulate less is a topic of constantdebate, one that The Economics of Regulation addresses incisively. It clearly remains the standardwork in the field, a starting point and reference tool for anyone working in regulation.Kahn pointsout that while dramatic changes have come about in the structurally competitive industries - theairlines, trucking, stock exchange brokerage services, railroads, buses, cable television, oil andnatural gas - the consensus about the desirability and necessity for regulated monopoly in publicutilities has likewise been dissolving, under the burdens of inflation, fuel crises, and thetraumatic experience with nuclear plants. Kahn reviews and assesses the changes in both areas: he isparticularly frank in his appraisal of the effect of deregulation on the airlines.His conclusiontoday mirrors that of his original, seminal work - that different industries need different mixes ofinstitutional arrangements that cannot be decided on the basis of ideology.Alfred E. Kahn is RobertJulius Thorne Professor of Political Economy at Cornell University and Special Consultant toNational Economic Research Associates.
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