Three decades ago, federal policymakers—Republicans and Democrats—embarked on a general strategy of deregulation. In the electricity, gas delivery, and telecommunications industries, the strategy called for restructuring to separate production from transmission and distribution, followed by elimination of price controls.

The expected results were lower prices and increased quality, reliability, and scope of services. Paul W. MacAvoy, an economist with forty years of experience in the regulatory field, here assesses the results and concludes that deregulation has failed to achieve any of these goals in any of these industries.

MacAvoy shows that we now have only partial deregulation, a mixture of oligopoly structure with direct price control. He explores why this system leads to volatile and high prices, reduced investment, and low profitability, and what policy actions can be implemented to address these problems.

Paul W. MacAvoy is Williams Brothers Professor Emeritus of Management Studies and former dean of the School of Management, Yale University. In the Ford administration, he served as a member of the Council of Economic Advisers.

MacAvoy is the author of fifteen books, including The Natural Gas Market: Sixty Years of Regulation and Deregulation, published by Yale University Press. He lives in Etna, NH, and Sarasota, FL.

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Hardcover: 208 pages
Author: Paul W. MacAvoy
Publisher: Yale University Press (July 28, 2007)
Language: English
ISBN-10: 0300121288
ISBN-13: 978-0300121285

CONTENTS
Preface, xi
1 Introduction to Network Technology and Market Structure,
2 The Regulation of Networks,
3 Electric and Gas Network Performance and Partial Deregulation,
4 The Strategic Response of Pacific Gas and Electric Corporation to Partial Deregulation during the California Power Crisis,
5 The Long Distance Telephone Networks and Partial Deregulation,
6 The Singular Result of Partial Deregulation and What Can Be Done,
Notes,
Bibliography,
Index

PREFACE
During the past thirty years the public utilities in electricity and gas distribution and in telephone services have been in the process of transforming corporate and thus market structures, with adverse consequences for their performance in the delivery of services.

The new structures were single-service oriented, wrought in the crucible of intense political heat under the guise of regulatory reform, which they were not. They came to the fore just as it became possible to deliver services more efficiently in networks designed to provide larger and more complex bundles of services. This change in the direction of regulatory reform, to increase the number of firms delivering service, conflicted with economic and technological forces to reduce the number of firms to provide new and better services.

The public plans and programs that were supposed to be the means of expanding service quality and volume in open competitive markets instead stalled, in partial deregulation, with the regulatory agencies focused more than ever on details in price regulation that caused network system breakdowns, stagnant investment, and corporate bankruptcy. ...

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