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Economic Regulation: Cases and Materials, 1994

Economic Regulation: Cases and Materials, 1994

Richard J. Pierce, Jr., Associate Dean for Faculty Development and Lyle T. Alverson Professor of Law, The George Washington University Law School


Availability: In Stock
Publisher :Anderson Publishing
Format: clothbound; 410 pp. , BOOK

ISBN: 9780870842757

1994
 
$88.00
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    The first three chapters of this book cover topics that have long been staples in economic regulation courses how healthy markets perform, the sources and effects of the most common forms of market failure, and the issues that arise recurrently in attempting to implement traditional cost-of-service regulation. The fourth chapter describes the etiology of regulatory failure in several contexts. It analyzes the symptoms and sources of poor performance in markets that were long subject to traditional cost-of-service regulation. The fifth chapter describes and analyzes in detail the forms of regulation that have come to dominate the "network" industries: telecommunications, natural gas, and electricity. The sixth chapter introduces readers to attempts to integrate economic regulation and environmental regulation.

    Professors and adjunct professors may request complimentary examination copies of LexisNexis law school publications to consider for class adoption or recommendation. Please identify the book(s) you wish to receive, provide your institutional contact information, and submit your request here.

    Chapter I: The Market 1

    A. Demand 1

    B. Supply 3

    C. Competitive Equilibrium 8

    Chapter II: Market Failure and Regulatory Intervention 11

    A. Natural Monopoly 12

    B. Destructive Competition 21

    C. The Tragedy of the Commons and Externalities 24

    D. Information Problems 32

    E. Third Party Decisionmakers and Third Party Payments 33

    F. Redistribution of Wealth 86

    G. Windfall Profits 46

    Chapter III: Basics of Regulation 1

    A. Traditional Formula for Calculating Allowed Revenues 51

    B. Rate Base and Rate of Return 52

    C. Rate Design 120

    D. Non-Price Regulatory Controls 155

    Chapter IV: Regulatory Failure 178

    A. Price Controls in a Structurally Competitive Market 178

    B. X-Inefficiency 190

    C. Jurisdictional Conflicts 198

    D. Structural Inefficiency 198

    Chapter V: Innovative Responses to Regulatory Failure 218

    A. Deregulation 214

    B. Breaking Up a Monopoly 215

    C. Equal Access to Bottleneck Facilities and Unbundling 230

    D. Competitive Contracting 261

    E. Competition at the Retail Level 314

    F. Incentive Regulation 331

    G. Changing Technology 348

    H. Transition Costs 346

    Chapter VI: Merging Economic Regulation and Environmental Regulation 357

    A. Contingent Valuation 358

    B. Conservation 361

    C. Environmental Adders 377

    CONTENTS

    Table of Cases xiii

    Acknowledgments xv

    Chapter I: The Market 1

    A. Demand 1

    B. Supply 3

    C. Competitive Equilibrium 8

    Chapter II: Market Failure and Regulatory Intervention 11

    A. Natural Monopoly 12

    George T. Brown, THE GAS LIGHT COMPANY OF BALTIMORE 63-69 (1936) 15

    1. Cost-of-Service Regulation 18

    2. Unbundling of Products and Services 19

    3. Changes in Technology 20

    4. Incentive Regulation 21

    B. Destructive Competition 21

    D. Locklin, THE ECONOMICS OF TRANSPORTATION 138-39 (6th ed. 1966) 22

    C. The Tragedy of the Commons and Externalities 24

    1. The Tragedy of the Commons 24

    Garrett Hardin, The Tragedy of the Commons, 162 SCIENCE 1243 (1968) 24

    N. W. Central Pipeline v. State Corporation Commission of Kansas, 489 U.S. 493 (1989) 27

    2. Externalities 31

    D. Information Problems 32

    E. Third Party Decisionmakers and Third Party Payments 33

    F. Redistribution of Wealth 36

    Richard Posner, Taxation By Regulation, 2 BELL JOURNAL OF ECONOMICS AND MANAGEMENT SCIENCE 22 (1971) 38

    G. Windfall Profits 46

    Chapter III: Basics of Regulation 51

    A. Traditional Formula for Calculating Allowed Revenues 51

    B. Rate Base and Rate of Return 52

    Smyth v. Ames, 169 U.S. 466 (1898) 58

    Bluefield Waterworks & Improvement Co. v. Public Service Commission 262 U.S. 679 (1923) 56

    Ernest Gellhorn & Richard J. Pierce, Jr., REGULATED INDUSTRIES IN A NUTSHELL 136-142 (2d. ed. 1987) 56

    New England Telephone & Telegraph Co. v. Maine Public Utilities Commission, Maine Supreme Judicial Court, 27 PUR4th 1, 390 A.2d 58

    Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591 (1944) 60

    Peter Navarro, Bruce C. Petersen & Thomas R. Stauffer, A Critical Comparison of Utility-Type Ratemaking Methodologies in Oil Pipeline Regulation, 12 BELL JOURNAL OF ECONOMICS 392-411 (1981) 63

    Robert R. Trout, A Rationale for Preferring Construction Work in Progress, in the Rate Base, 103 PUBLIC UTILITIES FORTNIGHTLY 22-26 (May 10, 1979) 69

    Richard J. Pierce, Jr., The Regulatory Treatment of Mistakes in Retrospect: Canceled Plants and Excess Capacity, 132 UNIVERSITY OF PENNSYLVANIA LAW REVIEW 497-560 (1984) 74

    Richard J. Pierce, Jr., Public Utility Regulatory Takings: Should the Judiciary Attempt to Police the Political Institutions?, 77 GEORGETOWN LAW JOURNAL 2031-2077 (1989) 83

    Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989) 96

    A. Lawrence Kolbe & William B. Tye, The Duquesne Opinion: How Much"Hope" Is There for Investors in Regulated Firms?, 8 YALE JOURNAL ON REGULATION 113-157 (1991) 101

    Richard J. Pierce, Jr., Placing The Duquesne Opinion in a Political Framework, 15 JOURNAL OF RESEARCH IN LAW & ECONOMICS 171 (1992) 83

    Nantahala Power & Light v. Thornburg, 476 U.S. 953 (1986) 115

    C. Rate Design 120

    1. Introduction 120

    2. Interests of the Regulated Firm 121

    3. The Legal Standard 122

    4. Cost-of-Service Regulation 123

    5. Rates Based on Marginal Cost 125

    Determining Relevance of Marginal Costs to Electric Rate Structure, No. 26806 (New York Public Service Commission, August 10, 1976) 125

    6. Common Costs and Fixed Costs 131

    Richard J. Pierce, Jr., Using the Gas Industry as a Guide to Reconstituting the Electricity Industry, 13 JOURNAL OF RESEARCH IN LAW & ECONOMICS 7 (1991) 132

    7. Ramsey Pricing 133

    Associated Gas Distributors v. FERC, 824 F. 2d 981 (D. C. Cir. 1987) 135

    Burlington Northern R. Co. v. ICC, 985 F.2d 589 (D.C. Cir. 1993) 13

    8. Multi-Part Rates 142

    Re Atlantic Seaboard Corp., Federal Power Commission, Opinion No. 225,11 FPC 43, 94 PUR (ns) 235 (April 25, 1952) 143

    Re United Fuel Gas Co., Federal Power Commission, Opinion No. 430, 31 FPC 1342, 55 PUR3d 196 (June 2, 1964) 146

    Order No. 636, (April 8, 1992), Federal Energy Regulatory Commission 150

    Richard J. Pierce, Jr., REGULATION AND COMPETITION IN NATURAL GAS DISTRIBUTION, 8, 12-15 (1990) 154

    D. Non-Price Regulatory Controls 155

    1. Restrictions on Entry 155

    Washington Utilities & Transportation Commission v. FCC, 513 F.2d (9th Cir. 1975) 157

    2. Restrictions on Exit 162

    Ernest Gellhorn & Richard J. Pierce, Jr., REGULATED INDUSTRIES IN A NUTSHELL, 231-236 (2d ed. 1987) 162

    Sunray Mid-Continent Oil Co. v. Federal Power Commission, 364 U.S. 137 (1960) 164

    Federal Power Commission v. Moss, 424 U.S. 494 (1976) 167

    3. Regulatory Obligation to Serve 169

    Richard J. Pierce, Jr., REGULATION AND COMPETITION IN NATURAL GAS DISTRIBUTION 9-12 (1990) 170

    Chapter IV: Regulatory Failure 178

    A. Price Controls in a Structurally Competitive Market 173

    Richard J. Pierce, Jr., Reconstituting the Natural Gas Industry from Wellhead to Burnertip, 9 ENERGY LAW JOURNAL 4-8 (1988) 174

    Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672 (1954) 177

    Richard J. Pierce, Jr., Reconstituting the Natural Gas Industry from Wellhead to Burnertip, 9 ENERGY LAW JOURNAL 8-15 (1988) 185

    B. X-Inefficiency 190

    John R. Meyer & William B. Tye, Toward Achieving Workable Competition in Industries Undergoing a Transition to Deregulation: A Contractual Equilibrium Approach, 5 YALE JOURNAL ON REGULATION 273, 277-279 (1988) 191

    C. Jurisdictional Conflicts 193

    Louisiana Public Service Commission v. Federal Communications Commission, 476 U.S. 355 (1986) 198

    D. Structural Inefficiency 198

    Stephen Breyer & Paul MacAvoy, ENERGY REGULATION BY THE FEDERAL POWER COMMISSION 89-121 (1974) 198

    Chapter V: Innovative Responses to Regulatory Failure 218

    A. Deregulation 214

    B. Breaking Up a Monopoly 215

    U.S. v. American Tel. & Tel. Co., 552 F. Supp. 131 (D.D.C. 1982) 215

    Paul W. MacAvoy & Kenneth Robinson, Winning by Losing: The AT&T Settlement and Its Impact on Telecommunications, 1 YALE JOURNAL ON REGULATION 1 (1983) 220

    Alfred E. Kahn, The Road to More Intelligent Telephone Pricing, 1 YALE JOURNAL ON REGULATION 139 (1984) 224

    C. Equal Access to Bottleneck Facilities and Unbundling 230

    Maryland People's Counsel v. FERC, 761 F.2d 768 (D.C. Cir. 1985) 231

    Associated Gas Distributors v. FERC, 824 F. 2d 98 1 (D.C. Cir. 1987) 237

    Richard J. Pierce, Jr., REGULATION AND COMPETITION IN NATURAL GAS DISTRIBUTION 5-8 (1990) 241

    Order No. 686 (April 8, 1992), Federal Energy Regulatory Commission 243

    Carl Danner, Where Telecommunications Regulation Has Been May Be Where Natural Gas Should Go, PUBLIC UTILITIES FORTNIGHTLY (1993) 248

    William W. Hogan, Electric Transmission: A New Model for Old Principles, THE ELECTRICITY JOURNAL (1993) 250

    D. Competitive Contracting 261

    Benjamin Klein, Robert G. Crawford & Armen A. Alchian, Vertical Integration, Appropriable Rents, and the Competitive Contracting Process, JOURNAL OF LAW AND ECONOMICS 297 (1978) 261

    Victor P. Goldberg, Regulation and Administered Contracts, 7 BELL JOURNAL OF ECONOMICS 426 (1976) 267

    PSI Energy v. Exxon Corp., 991 F.2d 1265 (7th Cir. 1993) 274

    Richard J. Pierce, Jr., Price Level Regulation Based on Inflation Is Not an Attractive Alternative to Profit Level Regulation, 84 NORTHWESTERN LAW REVIEW 665, 688-694 (1990) 278

    Bernard S. Black & Richard J. Pierce, Jr., The Choice Between Markets and Central Planning in Regulating the U.S. Electricity Industry, 93 COLUMBIA LAW REVIEW 1339, 1343-1354 (1993) 282

    Paul L. Joskow, Regulatory Failure, Regulatory Reform, and Structural Change in the Electrical Power Industry, 1989 BROOKINGS PAPERS: MICROECONOMICS 125-208 286

    1. Note on Regulatory Self-Dealing 289

    2. Competitive Contracting for Healthcare 292

    Alain C. Enthoven, The History and Principles of Managed Competition, HEALTH AFFAIRS, Supplement 1993, 24-48 293

    E. Competition at the Retail Level 314

    Associated Gas Distributors v. FERC, 824 F.2d 981 (D.C. Cir. 1987) 315

    Harry G. Broadman & Joseph P. Kalt, How Natural Is Monopoly? The Case of Bypass in Natural Gas Distribution Markets, 6 YALE JOURNAL ON REGULATION 181 (1989) 316

    Richard J. Pierce, Jr., Intrastate Natural Gas Regulation: An Alternative Perspective, 9 YALE JOURNAL ON REGULATION 407 (1992) 324

    Harold Demsetz, Why Regulate Utilities, 11 JOURNAL OF LAW AND ECONOMICS, 55 (1968) 327

    F. Incentive Regulation 331

    Paul L. Joskow & Richard Schmalensee, Incentive Regulation for Electric Utilities, 4 YALE JOURNAL ON REGULATION 1 (1986) 332

    Richard J. Pierce, Jr., Price Level Regulation Based on Inflation Is Not an Attractive Alternative to Profit Level Regulation, 84 NORTHWESTERN LAW REVIEW 665, 666-686 (1990) 337

    G. Changing Technology 343

    Roger G. Noll, The Twisted Pair: Regulation and Competition in Telecommunications, REGULATION 1987-2, 15-27 343

    H. Transition Costs 346

    Richard J. Pierce, Jr., Reconstituting the Natural Gas Market From Wellhead to Burnertip, 9 ENERGY LAW JOURNAL 1, 36-40 (1988) 348

    Richard J. Pierce, Jr., The Unintended Effects of Judicial Review of Agency Rules, 43 ADMINISTRATIVE LAW REVIEW 7, 17-21 (1991) 351

    Chapter VI: Merging Economic Regulation and Environmental Regulation 357

    A. Contingent Valuation 358

    B. Conservation 361

    Testimony of Ralph Cavanagh, Natural Resources Defense Council, Before the Subcommittee on Energy and Power of Committee on Energy and Commerce, U.S. House of Representatives, 100th Cong., 2d Sess., No. 100-197 at 9-21 (March 31, 1988) 362

    Bernard S. Black & Richard J. Pierce, Jr., The Choice Between Markets and Central Planning in Regulating the U.S. Electricity Industry, COLUMBIA LAW REVIEW 1339, 1354-1389 (1993) S65

    C. Environmental Adders 377

    Bernard S. Black & Richard J. Pierce, Jr., The Choice Between Markets and Central Planning in Regulating the U.S. Electricity Industry, 93 COLUMBIA LAW REVIEW 1339, 1390-1430 (1993) 378

     

    Richard J. Pierce, Jr.


     

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