Tuesday, December 28, 2010

Kahn's Lessons From Deregulation

Lessons From Deregulation: Telecommunications and Airlines After the Crunch (Brookings Inst. Press, 2003), one of Alfred Kahn's last works, is available online free of charge here.  From the abstract:

Over the last several years, the value of stocks in both the airline and the telecommunications industries have dropped catastrophically. Since these industries were among the most important?and most visible?to have been unleashed from regulation in recent decades (albeit in widely differing degree), their wrenching experience has understandably raised the question of whether their deregulation should be reconsidered or even reversed.

The airlines were comprehensively deregulated in 1978 in one bold stroke, and six years later the government apparatus for controlling domestic fares and routes was abolished. The telecommunications industry is in the midst of a parallel initiative, but one that is both more gradual and more complex. In common, however, is positive evidence of the advantages of open competition over direct comprehensive regulation.

Alfred E. Kahn, one of the foremost authorities on deregulation, argues in this book that every passing year demonstrates the superiority of the road chosen for the airlines. He contrasts the financial meltdowns of these two industries with others taking place at the same time, particularly in technology-related stocks and dot.coms, pointing out that these sectors were also relatively free of direct economic regulation. Their experience provides a useful counter to the natural tendency to blame all the woes of aviation and telecommunications on government policy.

This book provides a valuable and accessible guide to unraveling the complex world of network deregulation. It will serve as a reference point for practioners and policymakers, as well as an important introduction for the general public, written by one of the masters of the field.


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