KANSAS STATE UNIVERSITY
Department of Economics
THE ECONOMICS OF REGULATION
Economics 948
Waters 348
T, Th 8:05-9:20
Fall 2001
Professor D. Weisman
Office: Waters 246
Phone: 532-4588
weisman@ksu.edu
This course will investigate some issues of central importance in regulated industries.
Traditional issues such as Ramsey pricing, non-linear pricing, and rate-of-return regulation will
be examined. More recent developments such as incentive regulation mechanisms, non-price
discrimination and deregulation will also be examined. In addition, considerable attention will
be devoted to the design of regulatory policy in the presence of limited information.
Required readings will be announced. The syllabus contains a large number of references, far
more than it is possible to cover in a single semester. These additional references, which include
a number of classic papers, should prove useful to you in your research. A comprehensive text
covering traditional topics is Natural Monopoly Regulation: Principles and Practices by S. Berg
and J. Tschirhart (B&T), Cambridge University Press, 1988. This text is out of print, but copies
are available in the Arts and Sciences Copy Center, Room 11, Eisenhower Hall. Selected topics
in deregulation are covered in Whom The Gods Would Destroy, or How Not to Deregulate by
Alfred E. Kahn, AEI-Brookings Joint Center For Regulatory Studies, 2001.
Course requirements include a final examination, a formal research paper on a regulatory issue,
and a class presentation of an empirical paper that addresses some dimension of performance in a
regulated industry. Topics for the class presentation should be discussed with the instructor in
advance.
Consulting References.
W. Viscusi, J. Vernon and J. Harrington. Economics of Regulation and Antitrust. MIT Press,
2000.
Jean-Jacques Laffont and Jean Tirole. A Theory of Incentives in Procurement and Regulation.
MIT Press, 1993.
Stephen J. Brown and David S. Sibley. The Theory of Public Utility Pricing. Cambridge
University Press, 1986.
Roger Sherman. The Regulation of Monopoly. Cambridge University Press, 1989.
Richard Schmalensee and Robert Willig, Editors, Handbook of Industrial Organization. NorthHolland, 1989.
Alfred E. Kahn. The Economics of Regulation. MIT Press, 1988 (First Published in 1970-1971).
David E. M. Sappington and Dennis L. Weisman. Designing Incentive Regulation For The
Telecommunications Industry, MIT Press, 1996.
The Role and Boundaries of Regulation.
B&T, Chapter 1.
V. Goldberg, “Regulation and Administered Contracts,” Bell Journal of Economics, 7, August
1976, 426-448.
W. Jordan, “Producer Protection, Prior Market Structure and the Effects of Government
Regulation,” Journal of Law and Economics, 15, 1972, 151-176.
R. Posner, “The Appropriate Scope of Regulation in the Cable Television Industry,” Bell Journal
of Economics, 3, Spring 1972, 98-129.
R. Posner, “Taxation by Regulation,” Bell Journal of Economics, 2, Spring 1971, 22-50.
G. Stigler and C. Friedland, “What Can Regulators Regulate?” Journal of Law and Economics,
5, October 1962, 1-16.
O. Williamson, “Franchise Bidding for Natural Monopolies – In General and with Respect to
CATV,” Bell Journal of Economics, 7, Spring 1976, 73-104.
Competition for Regulatory Benefits.
B&T, Chapter 8, Sections 1 and 4.
G. Becker, “A Theory of Competition among Pressure Groups for Political Influence,”
Quarterly Journal of Economics, 97, August 1983, 371-400.
S. Peltzman, “Toward a More General Theory of Regulation,” Journal of Law and Economics,
19, August 1976, 211-240.
R. Posner, “The Social Costs of Monopoly and Regulation,” Journal of Political Economy, 83,
August 1975, 807-827.
W. Rogerson, “The Social Costs of Monopoly and Regulation: A Game-Theoretic Analysis,”
Bell Journal of Economics, Autumn 1982, 391-409.
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G. Stigler, “The Theory of Economics Regulation,” Bell Journal of Economics, 2, Spring 1971,
3-21.
S. Peltzman, “George Stigler’s Contribution to the Economic Analysis of Regulation,” Journal
of Political Economy, 1993, Vol. 101, No. 5, 818-832.
J. Laffont and J. Tirole. “The Politics of Government Decision-Making: Theory of Regulatory
Capture,” Quarterly Journal of Economics, November 1991, 1089-1127.
D. Salant, “Behind the Revolving Door: A New View of Public Utility Regulation,” Rand
Journal of Economics, Vol. 26, No. 3, Autumn 1995, 362-377.
J. Laffont and D. Martimort. “Separation of Regulators Against Collusive Behavior,” Rand
Journal of Economics, Vol. 30, No. 2, Summer 1999, 232-262.
Ramsey Pricing.
B&T, Chapter 3.
W. Baumol and D. Bradford, “Optimal Departures From Marginal Cost Pricing,” American
Economic Review, 60, June 1970, 265-283.
R. Braeutigam, “An Analysis of Fully Distributed Cost Pricing in Regulated Industries,” Bell
Journal of Economics, 11, Spring 1980, 182-192.
R. Braeutigam, “Optimal Pricing with Intermodal Competition,” American Economic Review,
69, March 1979, 38-49.
S. Brown and D. Sibley, The Theory of Public Utility Pricing, Cambridge University Press,
1987, Chapters 1 and 2.
F. Ramsey, “A Contribution to the Theory of Taxation,” Economic Journal, 37, March 1927,
47-61.
NonLinear Prices.
B&T, Chapter 4.
W. Adams and J. Yellin, “Commodity Bundling and the Burden of Monopoly,” Quarterly
Journal of Economics, 90, August 1976, 475-498.
S. Brown and D. Sibley, The Theory of Public Utility Pricing, Chapters 4 and 5.
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S. Goldman, H. Leland, and D. Sibley, “Optimal Nonuniform Prices,” Review of Economic
Studies, 1984, 305-319.
L. Mirman and D. Sibley, “Optimal Nonuniform Prices for Multiproduct Monopolies,” Bell
Journal of Economics, 11, Autumn 1980, 659-670.
W. Oi, “A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly,” Quarterly
Journal of Economics, 85, February 1971, 77-96.
S. Cassou and J. Hause. Uniform Two-Part Tariffs and Below Marginal Cost Prices: Disneyland
Revisited. Economic Inquiry, Volume 37, Number 1, January 1999, 74-85.
J. Ordover and J. Panzar, On the Nonexistence of Pareto Superior Outlay Schedules,” Bell
Journal of Economics, 11 Spring 1980, 351-355.
R. Scmalensee, “Monopolistic Two-Part Pricing Arrangements,” Bell Journal of Economics, 12,
Autumn 1981, 445-446.
M. Spence, “Nonlinear Prices and Welfare,” Journal of Public Economics, 8, 1977, 1-18. 47,
October 1980, 821-841.
R. Willig, “Pareto Superior Outlay Schedules,” Bell Journal of Economics, 9, Spring 1978, 5669.
R. Wilson. Nonlinear Pricing. Oxford University Press, 1993.
Peak Load Prices.
B&T, Chapter 5.
M. Boiteaux, “Peak Load Pricing,” Journal of Business, (Translated by H. Izzard), 33, No. 2
1960. 157-179.
D. Carlton, “Peak Load Pricing with Stochastic Demands,” American Economic Review, 67,
December 1977, 1006-1010.
M. Crew and P. Kleindorfer, “Peak Load Pricing with a Diverse Technology,” Bell Journal of
Economics, 7, Spring 1976, 207-231.
J. Panzar, “A Neoclassical Approach to Peak Load Pricing,” Bell Journal of Economics, 7,
Autumn 1976, 521-530.
P. Steiner, “Peak Loads and Efficient Pricing,” Quarterly Journal of Economics, 71, November
1957, 585-610.
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O. Williamson, “Peak Load Pricing and Optimal Capacity Under Indivisibility Constraints,”
American Economic Review, 56, September 1966, 810-827.
M. Crew, C. Chitru and P. Kleindorfer. “The Theory of Peak-Load Pricing: A Survey. Journal
of Regulatory Economics, Vol. 8, No. 3, November 1995, 215-248.
Sustainability and Contestability.
B&T, Chapters 2 and 7; Chapter 11, Sections 1 and 2.
E. Bailey, “Contestability and Design of Regulatory and Antitrust Policy,” American Economic
Review, 71, May 1981, 178-183.
W. Baumol, “On the Proper Cost Tests for Natural Monopoly in a Multiproduct Monopoly,”
American Economic Review, 67, December 1977, 809-822.
W. Baumol, E. Bailey, and R. Willig, “Weak Invisible Hand Theorems on the Sustainability of
Prices in a Multiproduct Monopoly,” American Economic Review, 67, June 1977, 360-365.
W. Baumol, J. Panzar, and R. Willig, Contestable Markets and the Theory of Industry Structure,
Harcourt, Brace, Jovanovich, 1982, Chapters 8, 10, 12, 16.
W. Baumol, and R. Willig, “Fixed Costs, Sunk Costs, Entry Barriers and Sustainability of
Monopoly,” Quarterly Journal of Economics, 95, August 1981, 405-431.
G. Faulhaber, “Cross-Subsidization: Pricing in Public Enterprises,” American Economic
Review, 65, December 1975, 966-977.
G. Faulhaber and S. Levinson, “Subsidy-Free Prices and Anonymous Equity,” American
Economic Review, 71, December 1981, 1083-1091.
J. Panzar and R. Willig, “Free Entry and the Sustainability of Natural Monopoly,” Bell Journal
of Economics, 8, Spring 1977, 1-22.
W. Sharkey, “Existence of Sustainable Prices for Natural Monopoly Outputs,” Bell Journal of
Economics, 8, Spring 1981, 144-154.
W. Sharkey, “Suggestions for a Game Theoretic Approach to Public Utility Pricing and Cost
Allocation,” Bell Journal of Economics, 13, Spring 1982, 57-68.
R. Willig, “Multiproduct Technology and Market Structure,” American Economic Review, 69,
May 1979, 346-351.
W. Shepherd, “Contestability vs. Competition,” American Economic Review, 74, 1984, 572-587.
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The Averch-Johnson Model of Regulation.
B&T, Chapter 9.
H. Averch and L. Johnson, “Behavior of the Firm Under Regulatory Constraint,” American
Economic Review, 52, December 1962, 1053-1069.
W. Baumol and A. Klevorick, “Input Choices and Rate of Return Regulation: An Overview of
the Discussion,” Bell Journal of Economics, 1, Autumn 1970, 162-190.
E. Bailey and R. Coleman, “The Effects of Lagged Regulation in an Averch-Johnson Model,”
Bell Journal of Economics, 2, Spring 1971, 278-293.
L. Evans and S. Garber, “Public Utility Regulators are Only Human: A Positive Theory of
Rational Constraints,” American Economic Review, 78(3), June 1988, 444-462.
Rate-of-Return Regulation.
V. Bawa and D. Sibley, “Dynamic Behavior of a Firm Subject to Stochastic Regulatory
Review,” International Economic Review, 21, October 1980, 627-642.
H. Burness, W. Montgomery and J. Quirk, “Capital Contracting and the Regulated Firm,”
American Economic Review, 70, June 1980, 342-354.
B. Greenwald, “Rate Base Selection and the Structure of Regulation,” Rand Journal of
Economics, 15, Spring 1984, 85-98.
P. Joskow, “The Determination of the Allowed Rate of Return in a Formal Regulatory Hearing,”
Bell Journal of Economics, 3, Autumn 1972, 632-644.
P. Joskow, “Inflation and the Environmental Concern: Structural Changes in the Process of
Public Utility Price Regulation,” Journal of Law and Economics, 17, 1974, 291-327.
B. Lipman, “Comment on ‘Dynamic Behavior of a Firm Subject to Stochastic Regulatory
Review’,” International Economic Review, 26(2) June 1985, 512-516.
R. Roberts, G. Maddala, and G. Enholm, “Determinants of the Requested Rate of Return and the
Rate of the Return Granted in a Formal Regulatory Process,” Bell Journal of Economics, 9,
Autumn 1978, 611-621.
A. Kolbe and W. Tye. “The Dusqesne Opinion: How Much ‘Hope’ is There for Investors in
Regulated Firms?” Yale Journal on Regulation, Vol. 8, No. 1, Winter 1991, 113-157.
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T. Lyon. “Regulation with 20-20 Hindsight: ‘Heads I Win, Tails You Lose’? Rand Journal of
Economics, Vol. 22, No. 4, Winter 1991, 581-595.
Quality Regulation.
B&T, Chapter 12, Section3.
G. Akerlof, “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism,”
Quarterly Journal of Economics, 84, August 1970, 488-500.
D. Besanko, S. Donnenfeld, and L. White, “Monopoly and Quality Distortion: Effects and
Remedies,” Quarterly Journal of Economics, 102, November 1987, 743-767.
D. Besanko, S. Donnenfeld, and L. White, “The Multiproduct Firm, Quality Choice, and
Regulation,” Journal of Industrial Economics, 36, June 1988, 411-430.
M. Mussa and S. Rosen, “Monopoly and Product Quality,” Journal of Economic Theory, 23,
August 1978, 301-317.
S. Peltzman, “The Effect of Automobile Safety Regulation,” Journal of Political Economy, 83,
August 1975, 677-725.
C. Shapiro, “Investment, Moral Hazard and Occupational Licensing,” Review of Economic
Studies, 53, October 1986, 843-862.
M. Spence, “Monopoly, Quality and Regulation,” Bell Journal of Economics, 6, Autumn 1975,
417-429.
Agency Models – Background.
R. Cooper, “On Allocative Distortions in Problems of Self-Selection,” Rand Journal of
Economics, 15, Winter 1984, 568-577.
S. Grossman and Oliver Hart, “An Analysis of the Principal-Agent Problem,” Econometrica, 51,
January 1983, 7-46.
T. Groves and M. Loeb, “Some Limitations of Demand-Revealing Processes,” Public Choice,
Spring 1977, 104-124.
M. Harris and A. Raviv, Optimal Incentive Contracts with Imperfect Information,” Journal of
Economic Theory, 20, April 1979, 231-259.
O. Hart and B. Holmstrom, “The Theory of Contracts,” in T. Bewley (ed.), Advanced in
Economic Theory, Cambridge University Press, 1988.
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B. Holmstrom, “Moral Hazard and Observability,”Bell Journal of Economics, 10, Spring 1979,
74-91.
I. Jewitt, “Justifying the First-Order Approach to Principal-Agent Problems,” Econometrica,
56(5), September 1988, 1177-1190.
R. Guesnerie and J. Laffont, “A Complete Solution to a Class of Principal-Agent Problems with
an Application to the Control of a Self-Managed Firm,” Journal of Public Economics, 25, July
1984, 329-369.
P. Milgrom, “Good News and Bad News: Representation Theorems and Applications,” Bell
Journal of Economics, 12, Autumn 1981, 380-391.
W. Rogerson, “The First-Order Approach to Principal-Agent Problems,” Econometrica, 53,
November 1985, 1357-1368.
D. Sappington, “Limited Liability Contracts Between Principal and Agent,” Journal of
Economic Theory, 29, February 1983, 1-21.
Regulation and Asymmetric Information Overviews.
B&T, Chapter 12, Section 4.
D. Baron, “The Design of Regulatory Mechanisms and Institutions,” in R. Schmalensee and R.
Willig (eds.), Handbook of Industrial Organization, North Holland, 1989.
D. Besanko, and D. Sappington, Designing Regulatory Policy with Limited Information,
Harwood, 1987, Chapters 1-3, 5.
B. Caillaud, R. Guesnerie, P. Rey, and J. Tirole, “Government Intervention in Production and
Incentives Theory: A Review of Recent Contributions,” Rand Journal of Economics, 19, Spring
1988, 1-26.
D. Sappington and J. Stiglitz, “Information and Regulation,” in E. Bailey (ed.), Public
Regulation: New Perspectives in Institutions and Policies MIT Press, 1987, 3-43.
J. Laffont. “The New Economics of Regulation Ten Years After,” Econometrica, Vol. 62,
No. 3, May 1994, 507-537.
Static Agency Models of Regulation.
D. Baron and R. DeBondt, “On the Design of Regulatory Price Adjustment Mechanisms,”
Journal of Economic Theory, 24, 1981, 70-94.
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D. Baron and R. Myerson, “Regulating a Monopolist with Unknown Costs,” Econometrica, 50,
July 1982, 911-930.
D. Besanko and D. Sappington, Designing Regulatory Policy with Limited Information, Chapters
3 and 5.
J. Laffont and J. Tirole, “Using Cost Observation to Regulate Firms,” Journal of Political
Economy, 94, June 1986, 614-641.
T. Lewis and D. Sappington, “Regulating a Monopolist with Unknown Demand,” American
Economic Review, 78(5), December 1988, 986-998.
D. Sappington, “Optimal Regulation of a Multiproduct Monopolist with Unknown Technological
Capabilities,” Bell Journal of Economics, 14, 1983, 453-463.
Auditing and Relative Performance.
J. Anton and D. Yao, “Second Sourcing and the Experience Curve: Price Competition in
Defense Procurement,” Rand Journal of Economics, 18, Spring 1987, 57-76.
D. Baron and D. Besanko, “Regulation, Asymmetric Information and Auditing,” Rand Journal
of Economics, 15, 1984, 447-470.
D. Baron and D. Besanko, “Monitoring, Moral Hazard, Asymmetric Information, and Risk
Sharing in Procurement Contracting,” Rand Journal of Economics, 18, Winter 1987, 509-532.
D. Besanko and D. Sappington, Designing Regulatory Policy with Limited Information, Chapters
4 and 8.
J. Demski and D. Sappington, “Optimal Incentive Contracts with Multiple Agents,” Journal of
Economic Theory, 33, June 1984, 152-171.
B. Nalebuff and J. Stiglitz, “Information, Competition, and Markets,” American Economic
Review, 14, May 1983, 278-283.
A.
Schleifer, “A Theory of Yardstick Competition,” Rand Journal of Economics, 16,
Autumn 1985, 319-327.
J. Sobel. “A Reexamination of Yardstick Competition.” Journal of Economics and Management
Strategy. Volume 8, Number 1, Spring 1999, 33-60.
D. Lehman and D. Weisman. “Telephone Pools and Economic Incentives,” Journal of
Regulatory Economics, Vol. 10, No. 2, September 1996, 123-146.
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Franchise Bidding.
B&T, Chapter 12, Section2.
J. Cremer and R. McLean, “Full Extraction of the Surplus in Bayesian and Dominant Strategy
Auctions,” Econometrica, 56(4), November 1988, 1247-1258.
H. Demsetz, “Why Regulate Utilities?” Journal of Law and Economics, February 1968, 11, 5565.
J. Laffont and J. Tirole, “Auctioning Incentive Contracts,” Journal of Political Economy, 95,
October 1987, 921-937.
M. Loeb and W. Magat, “A Decentralized Method for Utility Regulation,” Journal of Law and
Economics, 22, August 1979, 399-404.
P. McAfee and J. McMillian, “Competition for Agency Contracts,” Rand Journal of Economics,
18, Summer 1987, 296-307.
P. Milgrom and R. Weber, “A Theory of Auction and Competitive Bidding,” Econometrica, 50,
September 1982, 1089-1122.
M. Riordan and D. Sappington, “Awarding Monopoly Franchises,” American Economic Review,
77, June 1987, 375-387.
W. Sharkey, “A Decentralized Method for Utility Regulation: Comment,” Journal of Law and
Economics, 22, December 1979, 405-407.
O. Williamson, “Franchise Bidding for Natural Monopolies – In General and with Respect to
CATV,” Bell Journal of Economics, 7, Spring 1976, 73-104.
Dynamic Models of Regulation.
J. Finsinger and I. Vogelsang, “Alternative Institutional Frameworks for Price Incentive
Mechanisms,” Kyklos, 34, 1981, 388-404.
J. Finsinger and I. Vogelsang, “Strategic Management Behavior Under Reward Structures in a
Planned Economy,” Quarterly Journal of Economics, 100(1), February 1985, 263-269.
D. Sappington, “Strategic Firm Behavior Under a Dynamic Regulatory Adjustment Process,”
Bell Journal of Economics, 11, Spring 1980, 360-372.
D. Sappington and D. Sibley, “Regulating without Cost Information: The Incremental Surplus
Subsidy Scheme,” International Economic Review, 29, May 1988, 297-306.
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I. Vogelsang and J. Finsinger, “A Regulatory Adjustment Process for Optimal Pricing by
Multiproduct Monopoly Firms,” Bell Journal of Economics, 10 Spring 1979, 151-171.
I. Vogelsang, “A Little Paradox in the Design of Regulatory Mechanisms,” International
Economic Review, 29(3), August 1988, 467-476.
G. Blackmon. “The Incremental Surplus Subsidy and Rate-of-Return Regulation,” Journal of
Regulatory Economics 4, 1992, 187-196.
Regulation and Commitment.
D. Baron and D. Besanko, “Commitment and Fairness in a Dynamic Regulatory Relationship,”
Review of Economic Studies, 54, July 1987, 413-436.
D. Besanko and D. Sappington, Designing Regulatory Policy with Limited Information,
Chapter 7.
X. Freixas, R. Guesnerie, and J. Tirole, “Planning Under Incomplete Information and the Ratchet
Effect,” Review of Economic Studies, 52, April 1985, 173-191.
J. Laffont and J. Tirole, “The Dynamics of Incentive Contracts,” Econometrica, 56(5),
September 1988, 1153-1176.
R. Gilbert and D. Newberry. “The Dynamic Efficiency of Regulatory Constitutions,” Rand
Journal of Economics, Vol. 25, No. 4, Winter 1994, 538-554.
Price-Cap Regulation.
D. Sappington. “Price Regulation and Incentives” in Martin Cave, Sumit Majumdar, and Ingo
Vogelsang, eds. Handbook of Telecommunications Economics. Amsterdam: North-Holland,
2001 forthcoming.
G. Biglaiser and M. Riordan. “Dynamics of Price Regulation.” The Rand Journal of Economics,
Vol. 31, No. 4, Winter 2000, 744-767.
D. Lehman and D. Weisman. “The Political Economy of Price Cap Regulation.” Review of
Industrial Organization, Vol. 16, June 2000, 343-356.
R. Braeutigam and J. Panzar. “Diversification Incentives Under Price-Based and Cost-Based
Regulation,” Rand Journal of Economics, 20, No. 3, Autumn 1989, 373-391.
T. Brennan, “Regulating by ‘Capping Prices,” Journal of Regulatory Economics, 1, 1989,
133-147.
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D. Sappington and D. Weisman. “Potential Pitfalls in Empirical Investigations of the Effects of
Incentive Regulation Plans in The Telecommunications Industry,” Information Economics and
Policy, 8, 1996, 125-140.
D. Weisman. “Why Less May Be More Under Price Cap Regulation,” Journal of Regulatory
Economics, 6, 1994, 339-362.
D. Weisman. “Superior Regulatory Regimes in Theory and Practice,” Journal of Regulatory
Economics, Vol. 5(4), December 1993, 355-366.
M. Crew and Paul Kleindorfer. “Price Caps and Revenue Caps: Incentives and Disincentives
For Efficiency,” in Pricing and Regulatory Innovations Under Increasing Competition, ed, by
M. Crew. Kluwer Academic Press, 1996, 21-38.
Access Pricing.
D. Weisman. “Access Pricing and Exclusionary Behavior.” Economics Letters, Vol. 72, No. 1,
2001, 121-126.
W. Baumol and G. Sidak. “The Pricing of Inputs Sold to Competitors,” Yale Journal on
Regulation, Vol. 11, 1994, 171-202.
N. Economides and L. White. “Access and Interconnection Pricing: How Efficient Is The
‘Efficient Component Pricing Rule’?” The Antitrust Bulletin, Vol. XL, No. 3, 1995, 557-579.
A. Kahn and W. Taylor. “The Pricing of Inputs Sold To Competitors,” The Yale Journal on
Regulation, Vol. 11, No. 1, 1994, 225-240.
J. Laffont and J. Tirole. “Access Pricing and Competition,” European Economic Review, 38(9),
December 1994, 1673-1710.
J. Laffont and J. Tirole. “Creating Competition Through Interconnection: Theory and Practice.
Journal of Regulatory Economics, Vol. 10, No. 3, November 1996, 227-256.
A. Larson and D. Lehman. “Essentiality, Efficiency, and the Efficient Component Pricing
Rule,” Journal of Regulatory Economics, Vol. 12, No. 1, July 1997, 71-80.
M. Armstrong, C. Doyle and J. Vickers. “The Access Pricing Problem: A Synthesis,” Journal
of Industrial Economics, Vol. 44, 1996, 131-150.
J. Panzar and D. Sibley. “Optimal Two-Part Tariffs for Inputs,” Journal of Public Economics,
40, 1989, 237-249.
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D. Sibley, D., M. Doane, M. Williams, and S. Tsai. “Pricing Access To A Monopoly Input.”
Journal of Public Economic Theory, 2001 Forthcoming.
Willig, Robert D. “The Theory of Network Access Pricing,” in Harry M. Trebing (ed.) Issues in
Public Utility Regulation. (East Lansing Michigan: Michigan State University Press), 1979.
J. Laffont, P. Rey and J. Tirole. “Network Competition I: Overview and Non-Discriminatory
Pricing,” Rand Journal of Economics, Vol. 29, No. 1, 1998, 1-37.
J. Laffont, P. Rey and J. Tirole. “Network Competition II: Price Discrimination,” Rand Journal
of Economics, Vol. 29, No. 1, 1998, 38-56.
Non-Price Discrimination In Vertically-Integrated Markets.
G. Biglaiser and P. Degraba. “Downstream Integration by a Bottleneck Input Supplier Whose
Regulated Wholesale Prices Are Above Costs.” The Rand Journal of Economics, Vol. 32, No. 2,
Summer 2001, 302-315.
D. Weisman and J. Kang. “Incentives For Discrimination When Upstream Monopolists
Participate In Downstream Markets.” Journal of Regulatory Economics, 2001 Forthcoming
N. Economides “The Incentive for Non-Price Discrimination by an Input Monopolist.”
International Journal of Industrial Organization, Vol. 16, 1998, 271-284.
T. Krattenmaker and S. Salop. “Anti-Competitive Exclusion: Raising Rivals’ Costs To Achieve
Power Over Price.” Yale Law Journal, 96(2), 1986, 209-293.
D. Mandy “Killing The Goose That May Have Laid The Golden Egg: Only The Data Knows
Whether Sabotage Pays.” Journal of Regulatory Economics, Volume 17, Number 2, March
2000, 157-172.
S. Salop and D. Scheffman. “Raising Rivals’ Costs,” American Economic Review, 73, 1983, 267271.
D. Sibley and D. Weisman. “Raising Rivals’ Costs: The Entry of an Upstream Monopolist into
Downstream Markets.” Information Economics and Policy, Volume 10, Number 4, December
1998, 551-570.
D. Weisman. “Regulation and the Vertically Integrated Firm: The Case of RBOC Entry Into
InterLATA Long Distance.” Journal of Regulatory Economics, Vol. 8, 1995, 249-266.
D. Weisman and M. Williams. “The Costs and Benefits of Long-Distance Entry: Regulation and
Non-Price Discrimination.” Review of Industrial Organization, Vol. 18, 2001, 275-282.
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Applications of the Theory.
Electric Power.
S. Borenstein, J. Bushnell and S. Stoft. “The Competitive Effects of Transmission Capacity in a
Deregulated Electricity Industry.” The Rand Journal of Economics, Vol. 31, No. 2, Summer
2000, 294-325..
K. Leggio and Donald Lien. “Mergers in the Electric Utility Industry in a Deregulatory
Environment.” Journal of Regulatory Economics, Volume 17, Number 1, January 2000, 69-85.
P. Joskow and J. Tirole. “Transmission Rights and Market Power on Electric Power Networks.”
The Rand Journal of Economics, Vol. 31, No. 3, Autumn 2000, 450-487.
P. Joskow and R. Schmalensee, “Incentive Regulation for Electric Utilities,” Yale Journal of
Regulation, 4, Fall 1986, 1-50.
P. Joskow, “Regulatory Failure, Regulatory Reform, and Structural Change in the Electrical
Power Industry,” Brookings Papers on Economic Activity. 1989, 125-199 (D. Bohi and
F. Gollup Discussion, 200-208).
P. Joskow. “Restructuring, Competition and Regulatory Reform in the U.S. Electricity Sector,”
Journal of Economic Perspectives, Vol. 11, No. 3, Summer 1997, 119-138.
R. Geddes. “Ownership, Regulation, and Managerial Monitoring in the Electric Utility
Industry,” Journal of Law and Economics. Vol. XL (1) April 1997, 261-288.
Railroads and Trucking.
W. Wilson and R. Beilock, “Market Access in Regulated and Unregulated Markets: The
Continuing Cost of Interstate Motor Carrier Regulation. Journal of Regulatory Economics,
Vol. 6, No. 4, December 1994, 339-362.
K. Boyer, “The Costs of Price Regulation: Lessons from Railroad Deregulation,” Rand Journal
of Economics, 18, Autumn 1987, 408-416.
R. Braeutigam and R. Noll, “The Regulation of Surface Freight Transportation: The Welfare
Effects Revisited,” Review of Economics and Statistics, 66, January 1984, 80-87.
A. Friedlaender, E. Berndt, and G. McCullough. “Governance Structure, Managerial
Characteristics, and Firm Performance in the Deregulated Rail Industry,” Brookings Papers on
Economic Activity. 1992, 95-169 (J. Meyer and R. Braeutigam Discussion, 170-186.)
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Airlines.
E. Bailey and J. Williams. “Sources of Economic Rent in the Deregulated Airline Industry,”
Journal of Law and Economics. Vol. XXXI, April 1988, 173-202.
M. Levine. “Airline Competition in Deregulated Markets: Theory, Firm Strategy, and Public
Policy,” Yale Journal on Regulation. Vol. 4. No. 2, 1987, 393-494.
S. Morrison and Clifford Winston. “Enhancing The Performance of the Deregulated Air
Transportation System,” Brookings Papers on Economic Activity, 1989. 61-112. E. Bailey and
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