The Dynamics of Deregulation

Abstract: This paper examines the implications for economic welfare of the speed and scope of deregulation. Based primarily on case studies of six industries--railroads, natural gas, banking, airlines, cable television, and mobile telephony--we find that when strong competitive conditions existed, the slow and incremental approach to deregulation in these industries not only delayed the benefits to consumers from deregulation but also created economic distortions and dislocations. Based on these case studies, we develop a framework that could be used by public policy practitioners for evaluating whether industries are good candidates for deregulation.