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Deregulation and the Theory of Contestable Markets
Bailey, Elizabeth Baumol, William
Bailey, Elizabeth
Baumol, William
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Abstract
Until recently, the need to regulate monopoly was considered virtually axiomatic, and the imposition of rules governing entry, exit and pricing was deemed a priority. The deregulation movement has raised pragmatic questions about these orthodoxies, and, more recently, a new body of economic analysis called the theory of contestable markets has provided a conceptual basis for the view that many markets that are subject to economies of scale should not be regulated by the conventional methods.