Origin and Operation of Regulation in the USA

Abstract

Our approach to this point has been primarily to consider the nature of welfare optimal behaviour for natural monopoly. Henceforth we deal with the operation of various governance structures for natural monopoly. In this chapter, and in Chapter 6, we will be concerned with regulation of privately-owned natural monopoly. This is mainly a US phenomenon. However, in view of the interest in privatisation, for example, the sale of half of the stock of British Telecom to the public, the efficiency consequences of US regulation may be of interest outside the USA. In view of this we have attempted to compare the efficiency properties of various governance structure for natural monopoly, including rate-of-return regulation and public enterprise, by means of comparative institutional assessment in Chapter 7.