Toward Achieving Workable Competition in Industries Undergoing a Transition to Deregulation: A Contractual Equilibrium Approach

Abstract

In the late nineteenth and early twentieth centuries, economic regulation emerged in a variety of industries to respond to certain perceived problems. For most of these industries, students of economic regulation became convinced over time that, whatever the correctness of the original diagnosis, the regulatory cure was often worse than the market-imperfection disease. Moreover, new technology and changing markets often eliminated the perceived problems that regulatory institutions were designed to solve. Partly as a consequence, a political reaction set in against regulation, resulting in substantial deregulation of several previously regulated industries.