Letting Go: Deregulating the Process of Deregulation. Alfred E. Kahn.

Letting Go: Deregulating the Process of Deregulation. Alfred E. Kahn. 324 BOOK REVIEW by expropriating stockholder assets. With his focus on securing long-run optimality in regulation, Kahn argues against giving short-run economic gains to consumers by transferring to them the capitalized value of the sunk costs of telephone and power companies. To give into the demand for such short-run economic gains is the “Temptation of the Kleptocrats”. Instead, Kahn makes a case for protecting shareholder (or government-owned) wealth from regulatory extortion. I shall not trace Kahn’s thesis in detail here. One of the advantages of short books is that lengthy reviews are less valuable. But, as those familiar with Kahn would know, he does not rest his case on the equity argument that shareholders deserve to have their wealth protected from the winds of competition. Kahn is sympathetic to protecting shareholders whose investment expectations were based on the perceived stability of government regulatory policies and where stranded costs are the consequence of past government policies imposed upon utilities re- quiring them to uneconomically expand their asset base. Kahn’s real concern is that if government regulatory policies do not pay attention to stranded costs, it is not clear that new entrants (unencumbered by cost legacies and non-compensatory service obligations) will http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Letting Go: Deregulating the Process of Deregulation. Alfred E. Kahn.

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2000 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007852020644
Publisher site
See Article on Publisher Site

Abstract

324 BOOK REVIEW by expropriating stockholder assets. With his focus on securing long-run optimality in regulation, Kahn argues against giving short-run economic gains to consumers by transferring to them the capitalized value of the sunk costs of telephone and power companies. To give into the demand for such short-run economic gains is the “Temptation of the Kleptocrats”. Instead, Kahn makes a case for protecting shareholder (or government-owned) wealth from regulatory extortion. I shall not trace Kahn’s thesis in detail here. One of the advantages of short books is that lengthy reviews are less valuable. But, as those familiar with Kahn would know, he does not rest his case on the equity argument that shareholders deserve to have their wealth protected from the winds of competition. Kahn is sympathetic to protecting shareholders whose investment expectations were based on the perceived stability of government regulatory policies and where stranded costs are the consequence of past government policies imposed upon utilities re- quiring them to uneconomically expand their asset base. Kahn’s real concern is that if government regulatory policies do not pay attention to stranded costs, it is not clear that new entrants (unencumbered by cost legacies and non-compensatory service obligations) will

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 16, 2004

References

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