Toward a More General Theory of Regulation

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Abstract

George Stigler's work on the theory of regulation is one of those rare contributions--rare for the rest of us, though not for him--which force a fundamental change in the way important problems are analyzed. Stigler's influence will be clear in this paper.There is perhaps no more telling evidence of this influence than that its basic motivation was my dissatisfaction with some of Stigler's conclusions.(it was a dissatisfaction that Stigler shared, since I can report that we simultaneously reached one of the conclusions elaborated here--that regulatory agencies will not exclusively serve a single economic interest.)My intellectual debt to Stigler is so great that this paper emerges as an extension and generalization of his pioneering work.What Stigler accomplished in his Theory of Economic Regulation was to crystallize a revisionism in the economic analysis of regulation that he had helped launch in his and Claire Friedland's work on electric utilities.1The revisionism had its genesis in a growing disenchantment *This study has been supported by a