Edited by Peter C. Carstensen and Susan Beth Farmer
Chapter 10: Reflections on Mergers and Competition in Formerly Regulated Industries
10. Reﬂections on mergers and competition in formerly regulated industries Peter C. Carstensen The preceding case studies support several important conclusions about the history of revising (or indeed reversing) industry regulation to facilitate greater reliance on market transactions. Certainly, the legal institutions that were responsible for regulating these industries have gone through a Schumpeterian process of creative destruction. The consistent result over the wide variety of industries included here has been the enhancement of eﬃciency, stimulation of technological innovation and creation of new regulatory challenges. There is no ‘end to history’ in a dynamic economy. Every time the legal, technological or social context changes, industries must readjust their activities based on the perceptions of their decision makers, whether government regulators or corporate managers, about both short-term and longer-term strategy. The result is continuing evolution, although there are periods of greater or lesser change. For the last three decades, the United States has gone through a prolonged period of ‘deregulation’ that is a substantial change in the nature and content of the legal regulations under which these industries operate. In all the case studies except hospitals, there was at least some central planning of this transformation based on assumptions about how the new legal framework would work. One consistent feature of the case studies is the substantial degree of error in those assumptions. Only railroads and gas pipelines seem to have performed largely as predicted. At the same time, the case studies are unanimous in their conclusion that the...
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