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Regulatory Reform: Lessons For Natural Gas Pipelines

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  • RONALD R. BRAEUTIGAM

Abstract

This article examines regulatory reform and some possible consequences of reform designed to increase the role that competition plays in the interstate natural gas pipeline industry. The analysis first provides a conceptual framework for viewing the “problem of natural monopoly” as a basis for regulation. It summarizes ways in which introducing competition for a market may be possible even if competition within a market is not possible–through competitive auctions, monopolistic competition, or contestability. The analysis then relates briefly to this framework the experiences of three U.S. industries that have undergone substantial reform during recent years–airlines, motor carriers, and railroads. Finally, it compares the natural gas pipeline industry with the others examined and suggests types of regulatory reform that might succeed–and those that might not succeed–in improving resource allocation.

Suggested Citation

  • Ronald R. Braeutigam, 1990. "Regulatory Reform: Lessons For Natural Gas Pipelines," Contemporary Economic Policy, Western Economic Association International, vol. 8(2), pages 122-141, April.
    • Handle: RePEc:bla:coecpo:v:8:y:1990:i:2:p:122-141
    DOI: 10.1111/j.1465-7287.1990.tb00595.x
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    References listed on IDEAS

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    1. Theodore E. Keeler, 1972. "Airline Regulation and Market Performance," Bell Journal of Economics, The RAND Corporation, vol. 3(2), pages 399-424, Autumn.
    2. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    3. Evans, David S & Heckman, James J, 1984. "A Test for Subadditivity of the Cost Function with an Application to the Bell System," American Economic Review, American Economic Association, vol. 74(4), pages 615-623, September.
    4. Callen, Jeffrey L, 1978. "Production, Efficiency, and Welfare in the Natural Gas Transmission Industry," American Economic Review, American Economic Association, vol. 68(3), pages 311-323, June.
    5. Grether, David M & Isaac, R Mark & Plott, Charles R, 1981. "The Allocation of Landing Rights by Unanimity among Competitors," American Economic Review, American Economic Association, vol. 71(2), pages 166-171, May.
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