The End of a Natural Monopoly: Deregulation and Competition in the Electric Power Industry

By Peter Z. Grossman; Daniel H. Cole | Go to book overview

EDITORS' FOREWORD TO CHAPTER 3

If, as the previous chapter has argued, a “natural” monopoly is at best accidental and contingent, then how is it that the electric power industry came to be identified as one? There would seem to be two possibilities. First, contingencies at the time the industry was founded made it a natural monopoly, in which one firm truly would have been the outcome of market competition. The second alternative is that political and/or business interests wanted to create the industry as a set of government-regulated monopolies, regardless of whether institutional, technological, and economic circumstances justified such a structure.

Well into the 1970s and 1980s, representatives of the electric power industry argued that it was, and in fact had always been, a real natural monopoly (Lowry, 1973). To explain how the system of regulated monopoly firms came into being, the industry offered two different, and not entirely consistent, “creation myths, ” both of which incorporated aspects of natural monopoly theory.

The first story is one of natural evolution from a competitive industry towards self-regulated monopoly. The industry, according to this story, was heading towards a monopoly structure before the government ever got involved. Subsequent government regulation was intended to prevent the inevitable monopoly providers from exercising too much market power to the detriment of consumers. In this story, the government acted, after the reality of monopoly became both apparent and desirable, strictly to protect the public interest. The utilities at first worked with “unvarying consistency and stubbornness” using “all their political influence to oppose the establishment of regulatory bodies and later the extension of powers of such bodies” (Mosher & Crawford, 1933, p. 551). That is to say, the utilities wanted freedom from government regulation. But once it was clear that regulation was coming because government would not relent in its assault on free enterprise, industry firms and organizations used their influence to minimize its effects, so that the market would rule to the greatest extent possible.

According to the second “creation myth, ” utilities began competitively but, because of the industry's natural monopoly characteristics, competition became

-41-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
The End of a Natural Monopoly: Deregulation and Competition in the Electric Power Industry
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 248

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.