Empirical Evidence: Regulated Industries

Abstract

At this juncture we have presented neoclassical theory (an admitted mechanical presentation, with some justification), XE theory, and several other deviations from orthodox neoclassical theory. In several ways these deviations, including XE theory, have common elements. In several ways, each is unique. We have also presented the implications of XE theory. It is thus now time to present empirical evidence consistent with these implications of XE theory. Several points about this evidence should be kept in mind. First, the evidence will be divided into three categories: (1) studies on regulated industries; (2) studies on the ownership form of the firm; and (3) studies of market structure. Second, some any of these studies probe into two or more of these categories. Each study was placed in the category which seemed to be its central focus. Third, most of the studies presented in the next three chapters discuss XE theory explicitly. The reader will be made aware of those studies that do not discuss XE theory explicitly. The inclusion of this latter group of studies is felt justified as long as the results are consistent with the implications of XE theory. Despite this, I made an attempt to minimize the number of these types of studies.