Passing of the public utility concept: a reprise
The institution of the closely regulated, confined, franchised monopoly - which produced reasonably satisfactory results for all parties, including the public, until around 1970 - has since then proven to be progressively unsuited to the drastically altered condition of the US economy. The deregulation revolution has stripped the federal government of much of its authority over numerous sectors of the US economy: airlines, railroads, communications, and energy utilities. The critical criterion for public policy toward deregulation is the easibility of effective competition or, in other words, the likely dimensions and durability of monopoly power. The diversification efforts have significantly changed the concept of the public utility. Furthermore, the use by utility companies of their control over monopoly bottlenecks to obstruct competitors remains a great and undeniable danger; this exercise of monopolistic leverage must be prevented by the regulated companies themselves and by the regulators. Both regulation and deregulation have definite drawbacks. All regulation is inescapably protectionist and monopolistic in its method and consequences; however, a clear distinction still exists between (1) preventing competition in industries that are potentially highly competitive - an effect of misplaced regulation - and (2) setting maximum rates in markets that retain a high degree of monopoly power even when entry is legally free - the ultimate purpose of regulation.
- OSTI ID:
- 6115811
- Country of Publication:
- United States
- Language:
- English
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& Utilization- Municipalities & Community Systems- Public Utilities- (1980-)