Enterprise, Government and the Public / Edition 1

Enterprise, Government and the Public / Edition 1

by Stephen J.K. Walters
     
 

ISBN-10: 0070680299

ISBN-13: 9780070680296

Pub. Date: 10/28/1992

Publisher: McGraw-Hill Companies, The

Product Details

ISBN-13:
9780070680296
Publisher:
McGraw-Hill Companies, The
Publication date:
10/28/1992
Pages:
591

Table of Contents

PREFACE xix
PART 1 OVERVIEW: HOW AND WHY GOVERNMENT INTERVENES IN MARKETS 1(112)
1 What Government Does: Regulatory Activities
3(21)
HOW IT DEVELOPED: A BRIEF HISTORY OF REGULATION
4(2)
The Post-Revolutionary Era
4(2)
Vignette 1.1 Institutions Matter: The Confederation Period
6(4)
The Late 19th Century to World War I
7(1)
The Great Depression to Today
8(2)
Vignette 1.2 Ideas Have Consequences: From Upton Sinclair to Rachel Carson
10(1)
THE NATURE AND MECHANISMS OF REGULATION
10(4)
Types of Regulation
10(1)
Administrative Structure of Regulation
11(3)
Vignette 1.3 The Power of the Purse: Congress and the FTC
14(2)
Tools of Regulation
15(1)
THE GROWTH OF GOVERNMENT
16(4)
The Size of Government
16(2)
The Impact of Government
18(2)
SUMMARY AND CONCLUDING REMARKS
20(2)
QUESTIONS FOR REVIEW AND DISCUSSION
22(2)
2 What Markets Do: Competition and Efficiency
24(31)
"PERFECT" COMPETITION
25(6)
The Nature of Production Costs
25(5)
The Assumptions of the Perfect Competition Model
30(1)
Vignette 2.1 Is There a Perfectly Competitive Market in the House?
31(12)
Competitive Behavior in the Short Run
32(4)
Economic Profits versus Accounting Profits
36(1)
Competitive Behavior in the Long Run
37(2)
Competition and Social Welfare
39(4)
Vignette 2.2 Can There Be Too Much Competition? The Case of Airline Safety
43(2)
COMPETITION IN THE REAL WORLD
45(4)
Workable Competition
45(2)
Contestable Markets
47(2)
Vignette 2.3 Empirical Evidence on Contestability
49(1)
COMPETITIVE MARKETS: OTHER VIEWS
50(2)
SUMMARY AND CONCLUDING REMARKS
52(1)
QUESTIONS FOR REVIEW AND DISCUSSION
53(2)
3 Government Intervention and the Public Interest
55(25)
MARKET FAILURE AND THE PUBLIC INTEREST
56(2)
The Problem of Monopoly
56(2)
Vignette 3.1 What Does Monopoly Cost Us?
58(7)
Related Problems: Oligopoly and Natural Monopoly
61(2)
Externalities
63(2)
Vignette 3.2 Overhunting as a Negative Externality
65(6)
Public Goods
66(3)
Information Problems
69(2)
Vignette 3.3 Tobacco Use and Health Warnings
71(2)
Merit and Demerit Goods
72(1)
ENHANCING EQUITY
73(2)
Vignette 3.4 Government Transfers and Poverty
75(2)
SUMMARY AND CONCLUDING REMARKS
77(1)
QUESTIONS FOR REVIEW AND DISCUSSION
78(2)
4 Capture Theory and Beyond: The Political Marketplace
80(33)
CAPTURE THEORY
81(1)
Vignette 4.1 Did the Railroads Capture the ICC?
82(1)
REGULATION AS AN ECONOMIC GOOD
83(2)
Vignette 4.2 The "Goods" We Demand from Government
85(1)
THE THEORY OF PUBLIC CHOICE
86(17)
The Behavior of Voters
87(5)
The Behavior of Politicians
92(7)
The Behavior of Bureaucrats
99(4)
Vignette 4.3 Are Public Enterprises Inefficient?
103(4)
Rent Seeking
105(2)
Vignette 4.4 Taxicab Regulation, Deregulation, and Rent Seeking
107(3)
SUMMARY AND CONCLUDING REMARKS
110(1)
QUESTIONS FOR REVIEW AND DISCUSSION
111(2)
PART 2 PUBLIC POLICY TOWARD MONOPOLY 113(222)
5 Antitrust Laws and Institutions: An Overview
115(18)
THE EVOLUTION OF ANTITRUST LEGISLATION
116(4)
The Sherman Act
116(2)
The Clayton and FTC Acts
118(2)
Vignette 5.1 A Controversy: Whom Do the Antitrust Laws Aim to Protect?
120(2)
THE REALM OF ANTITRUST ENFORCEMENT
122(1)
Mechanisms and Procedures
122(1)
Vignette 5.2 Is Federal Antitrust Enforcement Efficient?
123(4)
Penalties and Remedies
126(1)
Vignette 5.3 The $1 Monopoly
127(3)
Antitrust Exemptions
129(1)
Vignette 5.4 Avoiding Antitrust: The Importance of Interest-Group Politics
130(1)
SUMMARY AND CONCLUDING REMARKS
131(1)
QUESTIONS FOR REVIEW AND DISCUSSION
132(1)
6 Monopolization
133(35)
THE STRUCTURE-CONDUCT-PERFORMANCE PARADIGM
134(1)
MEASUREMENT ISSUES
135(3)
Market Structure Indicators
135(3)
Vignette 6.1 Is Aggregate Concentration Increasing?
138(3)
Market Definition
138(3)
Vignette 6.2 "Reasonable" Interchangeability: From du Pont to Grinnell
141(5)
Criticisms of Market Structure Indicators
143(1)
Performance Measures
144(2)
Vignette 6.3 A Closer Look at Profit Rates
146(1)
MONOPOLIZATION POLICY: KEY ANALYTICAL ISSUES
147(3)
The Courts' Two-Part Test
148(1)
Predation
149(1)
Vignette 6.4 Predatory Pricing and the Areeda-Turner Rule in Practice: O. C. Hanson Sues Big Oil
150(9)
Entry Barriers and Entry Deterrence: Limit Pricing
153(4)
Remedying Monopoly: Should We Deconcentrate?
157(2)
THE EVOLUTION OF THE LAW
159(6)
E. C. Knight (1895)
160(1)
Northern Securities (1904)
160(1)
Standard Oil (1911)
161(1)
U.S. Steel (1920)
162(1)
Alcoa (1945)
162(1)
IBM (1982)
163(1)
AT&T (1982)
164(1)
Where We Stand Today
165(1)
SUMMARY AND CONCLUDING REMARKS
165(1)
QUESTIONS FOR REVIEW AND DISCUSSION
166(2)
7 Oligopoly and Collusion
168(35)
Vignette 7.1 The Logic of Collusion: The Case of College Football
169(1)
OLIGOPOLY THEORIES
170(8)
The Cournot Model
170(3)
Cournot's Successors
173(5)
Vignette 7.2 How Not to Collude: The Great Electrical Equipment Conspiracy
178(8)
Game Theory and Oligopoly
179(5)
Can Collusion Be Beneficial?
184(2)
A Partial Summation
186(1)
PROFITS AND CONCENTRATION: THEORY, EVIDENCE, AND POLICY
186(3)
PUBLIC POLICY TOWARD OLIGOPOLY AND COLLUSION
189(3)
Price-Fixing and Market Rigging
190(2)
Vignette 7.3 Was the Collusion in Addyston Really Harmful?
192(8)
Trade Association Activities
195(2)
Conscious Parallelism and Implied Conspiracy
197(2)
The Professions
199(1)
Vignette 7.4 How Does an Advertising Ban Affect Prices?
200(1)
SUMMARY AND CONCLUDING REMARKS
200(1)
QUESTIONS FOR REVIEW AND DISCUSSION
201(2)
8 Mergers and Acquisitions
203(38)
MOTIVES FOR MERGERS AND ACQUISITIONS
206(1)
Antiefficiency Motives
206(1)
Vignette 8.1 The Returns to Market Control: The Creation of U.S. Steel
206(10)
Pro-Efficiency Motives
210(6)
Vignette 8.2 Integration and Asset Specificity: Some Evidence
216(2)
ANTITRUST AND HORIZONTAL MERGERS
218(7)
Key Horizontal Merger Cases
219(3)
The 1980s: Justice Department Merger Guidelines
222(3)
ANTITRUST AND VERTICAL MERGERS
225(5)
Key Cases
226(1)
Market Foreclosure Analyzed
227(2)
New Vertical Merger Guidelines
229(1)
CONGLOMERATE MERGERS AND HOSTILE TAKEOVERS
230(2)
Antitrust Considerations
230(1)
Key Cases
231(1)
Vignette 8.3 Reciprocity, Conglomeration, and Opportunism
232(2)
THE WILLIAMS ACT AND REGULATION OF TAKEOVER ACTIVITY
234(3)
The Market for Corporate Control: Empirical Evidence
235(2)
Vignette 8.4 Staying in Charge with a Little Help from One's Friends: Public Choice Analysis and State Antitakeover Laws
237(1)
SUMMARY AND CONCLUDING REMARKS
238(1)
QUESTIONS FOR REVIEW AND DISCUSSION
239(2)
9 Price Discrimination
241(29)
THE ECONOMICS OF PRICE DISCRIMINATION
242(5)
Preliminaries: Definitions and Conditions
242(2)
Perfect Price Discrimination
244(3)
Vignette 9.1 Price Discrimination by Labor Unions
247(6)
Multipart Pricing
250(1)
Market Segmentation
251(2)
Vignette 9.2 Price Discrimination and Time
253(1)
WELFARE EFFECTS OF PRICE DISCRIMINATION
254(3)
POLICY TOWARD PRICE DISCRIMINATION
257(5)
The Robinson-Patman Act
257(1)
Some Pros and Cons
258(2)
Key Cases
260(2)
Vignette 9.3 Basing-Point Pricing Reexamined
262(5)
Where We Stand Now
266(1)
SUMMARY AND CONCLUDING REMARKS
267(1)
QUESTIONS FOR REVIEW AND DISCUSSION
268(2)
10 Trade Practices
270(34)
TIE-IN SALES
270(4)
Antitrust Objections
271(1)
Legal Treatment of Tie-ins
272(2)
Vignette 10.1 Tie-ins in the Movie Industry: Block Booking
274(2)
EXCLUSIVE DEALING
276(2)
Antitrust Objections
276(1)
Legal Treatment of Exclusive Dealing
277(1)
VERTICAL RESTRAINTS
278(6)
Antitrust Objections
279(1)
Legal Treatment of Vertical Restraints
280(4)
Vignette 10.2 Some Pro- and Anticompetitive Effects of Vertical Restraints
284(1)
ECONOMIC ANALYSIS OF VARIOUS TRADE PRACTICES
285(10)
Quality Assurance and Maintenance of Brand Name
285(2)
The Problem of Free Riding
287(2)
Successive-Monopoly Distortion
289(2)
Tying and Price Discrimination
291(1)
Leverage and Monopoly Extension
291(4)
NONPRICE PREDATION
295(5)
Forms of Nonprice Predation
296(2)
Raising Rivals' Costs
298(2)
Vignette 10.3 Predatory or Strategic Use of Government
300(1)
SUMMARY AND CONCLUDING REMARKS
301(1)
QUESTIONS FOR REVIEW AND DISCUSSION
302(2)
11 Special Topics in Competition Policy: Advertising and Patents
304(31)
ADVERTISING
304(7)
Economics and Advertising
305(6)
Vignette 11.1 Marketing a Legend
311(8)
Some Empirical Evidence
312(4)
Public Policy and Advertising
316(3)
Vignette 11.2 The Cigarette Advertisement Ban
319(1)
PATENTS
320(3)
Background
321(2)
Vignette 11.3 The Productivity Slowdown and Patent Activity
323(9)
Patents, Innovative Activity, and Welfare
324(3)
Abuses of Patents
327(2)
Some Case Law
329(2)
Suggestions for Reform
331(1)
SUMMARY AND CONCLUDING REMARKS
332(1)
QUESTIONS FOR REVIEW AND DISCUSSION
333(2)
PART 3 ECONOMIC REGULATION 335(136)
12 Natural Monopoly and Economic Regulation
337(31)
THE THEORY OF NATURAL MONOPOLY
339(7)
The Multiproduct Firm
342(4)
Vignette 12.1 Economies of Scale and Scope in U.S. Industries: Some Empirical Evidence
346(3)
Sustainability of Natural Monopoly
347(2)
OTHER RATIONALES FOR ECONOMIC REGULATION
349(2)
Destructive Competition
349(2)
Vignette 12.2 Destructive Competition in Transportation Industries?
351(4)
Equity Considerations
352(2)
Rationing
354(1)
Vignette 12.3 Rationing the Broadcast Spectrum
355(4)
Market Stabilization
356(2)
Regulation Not in the Public Interest: Capture and Rent Seeking
358(1)
Vignette 12.4 Early Regulation of Electric Utilities: Who Gained?
359(2)
DILEMMAS FOR REGULATORS
361(4)
The Pricing Problem
362(1)
The Incentive Problem
363(2)
SUMMARY AND CONCLUDING REMARKS
365(1)
QUESTIONS FOR REVIEW AND DISCUSSION
366(2)
13 Regulatory Strategies and Alternatives
368(36)
THE PRICING DILEMMA: POSSIBLE SOLUTIONS
369(5)
Price Discrimination
370(2)
Value-of-Service Pricing
372(2)
Vignette 13.1 Value-of-Service Pricing in the Rail and Trucking Industries
374(5)
Pricing, Capacity, and Peak-Load Problems
374(5)
RATE-OF-RETURN REGULATION IN THEORY AND PRACTICE
379(9)
Practical Difficulties
380(4)
Incentive Problems
384(4)
INCENTIVE-COMPATIBLE ECONOMIC REGULATION
388(3)
Vignette 13.2 Price Caps in the Telephone Industry
391(2)
ALTERNATIVES TO REGULATION
393(3)
Public Ownership
394(2)
Vignette 13.3 Neither Rain Nor Sleet Nor Competitors...
396(3)
Franchise Bidding
397(2)
Vignette 13.4 Franchise Bidding and Waterworks
399(2)
Deregulation
399(2)
SUMMARY AND CONCLUDING REMARKS
401(1)
QUESTIONS FOR REVIEW AND DISCUSSION
402(2)
14 Economic Regulation and Natural Monopoly: The Electricity, Natural Gas, and Telecommunications Industries
404(33)
ELECTRIC UTILITIES
404(5)
Overview
405(2)
Current Rate Regulation
407(2)
Vignette 14.1 Peak-Load Pricing and Consumer Behavior
409(4)
Effects of Regulation
410(3)
Vignette 14.2 Competitive Electric Utilities?
413(1)
NATURAL GAS
414(3)
Overview
414(3)
Vignette 14.3 The Dual Market for Natural Gas
417(4)
Effects of Regulation
419(2)
TELECOMMUNICATIONS
421(9)
Overview
421(5)
Effects of (Predivestiture) Regulation
426(4)
Vignette 14.4 The Welfare Effects of a Zero-Price Lunch
430(4)
Restructuring the Industry
431(3)
SUMMARY AND CONCLUDING REMARKS
434(1)
QUESTIONS FOR REVIEW AND DISCUSSION
435(2)
15 Economic Regulation in a Nonmonopoly Setting: Transportation, Agriculture, and Savings Institutions
437(34)
RAIL AND TRUCK TRANSPORTATION
437(8)
Overview
438(1)
Effects of Regulation
439(4)
Deregulation
443(2)
AIRLINE TRANSPORTATION
445(6)
Overview
445(3)
Effects of Regulation
448(1)
Deregulation
449(2)
Vignette 15.1 Are Airline Hubs Anticompetitive?
451(1)
AGRICULTURE
452(9)
Overview
453(3)
Effects of Regulation
456(4)
Prospects for Reform
460(1)
Vignette 15.2 Sweet Deal or Bitter Harvest?
461(1)
SAVINGS INSTITUTIONS
462(4)
Overview
462(2)
Effects of Regulation and Deregulation
464(2)
Vignette 15.3 Constituent Service or Influence Peddling? Congress and the S&L Crisis
466(2)
SUMMARY AND CONCLUDING REMARKS
468(2)
QUESTIONS FOR REVIEW AND DISCUSSION
470(1)
PART 4 SOCIAL REGULATION 471(78)
16 Environmental Protection and Public Policy
473(37)
ECONOMICS AND THE ENVIRONMENT
474(1)
Vignette 16.1 Capitalism, Socialism, and Pollution
475(7)
The Externality Problem: Welfare Effects Reviewed
476(3)
Liability Rules and Pigou Taxes
479(1)
The Coasian Critique
479(3)
Vignette 16.2 The Land of Fruit and Honey
482(4)
Vignette 16.3 The Common Law on Pollution Externalities
486(5)
Setting Standards
486(5)
PUBLIC POLICY AND ENVIRONMENTAL QUALITY
491(9)
Environmental Problems: An Overview
491(1)
Structure and Policies of the EPA
491(4)
The Effects of Environmental Policy
495(5)
REGULATORY REFORM
500(7)
Criticisms
501(2)
Market-Based Policies
503(3)
Recent Trends
506(1)
SUMMARY AND CONCLUDING REMARKS
507(1)
QUESTIONS FOR REVIEW AND DISCUSSION
508(2)
17 Protecting the Health and Safety of Consumers and Workers
510(39)
HEALTH, SAFETY, AND THE MARKET
511(2)
Sources of Market Failure
511(2)
Vignette 17.1 A Labeling Experiment
513(9)
Optimal Exposure to Risk
515(1)
Markets and Risk
515(7)
THE FOOD AND DRUG ADMINISTRATION
522(3)
Background
522(1)
Methods
522(1)
Enforcement and Remedies
523(1)
Performance
523(2)
Vignette 17.2 Bureaucratic Lag and Drug Availability
525(1)
THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION
526(4)
Background
526(1)
Methods
527(1)
Enforcement and Remedies
527(1)
Performance
528(2)
Vignette 17.3 Unintended Effects of Regulations: Fuel Economy Standards and Automobile Safety
530(1)
THE CONSUMER PRODUCT SAFETY COMMISSION
531(3)
Background
531(1)
Methods
531(1)
Enforcement and Remedies
532(1)
Performance
532(2)
PRODUCT LIABILITY LAW
534(6)
Product Liability Rules
534(2)
Trends in Case Law
536(1)
Effects
537(3)
REGULATING THE WORKPLACE: OSHA
540(3)
Background
540(1)
Methods
540(2)
Enforcement and Remedies
542(1)
Vignette 17.4 To Lumberjacks, OSHA Is Not OK
543(3)
Performance
544(2)
SUMMARY AND CONCLUDING REMARKS
546(1)
QUESTIONS FOR REVIEW AND DISCUSSION
547(2)
PART 5 CONCLUSION 549(28)
18 Antitrust and Regulation Policy: Retrospect and Prospect
551(26)
GOVERNMENT REGULATION AND POPULAR OPINION
552(3)
THE JUDGMENTS OF SCHOLARS AND POLICYMAKERS
555(12)
Antitrust Policy
556(4)
Economic Regulation
560(1)
Social Regulation
561(6)
THE FUTURE: EMERGING TRENDS
567(10)
Antitrust
568(2)
Regulation
570(7)
INDEXES 577
Name Index 577(6)
Subject Index 583

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