Download Economic Goals for Markets

Academic Music, Victoria’s
Secret, and Deregulation
Remarks by Dr. William G. Shepherd
Emeritus Professor of Economics, the
University of Massachusetts at Amherst
February 5, 2006
Talking Points
I. Economic Goals for Markets
II. Criteria for Effective Competition
III.Common Dangers of Deregulation
IV.Some Actual Results of
Deregulation
I. Economic Goals for Markets

Technological Progress

Efficiency of Various Kinds


Internal Efficiency
Allocative Efficiency

Fairness in Distribution

The Competitive Process Itself

Others:

Freedom of choice for individuals

Security from extreme risks and losses, of jobs and
livelihoods
II. Criteria for Effective Competition

Pure Competition

A Single Monopoly Firm, Plus Contestability

Just Two Rivals

“Workable Competition”

At Least Five Comparable Competitors


Plus Free Entry
At Least 15-20 Comparable Rivals

Plus Free Entry
III. Common Dangers of Deregulation

Too Quick, Too Far, and Badly Designed


California, et al.
Abuses by the Former Monopoly Firm

Predatory Pricing

Lax Permission for Anti-Competitive Mergers

Weak Antitrust


And Weak Regulation
Result: An Entrenched Dominant Firm
IV. Some Actual Results of
Deregulation

“Good” Deregulation


Mixed Deregulation


Financial Markets, Trucking, etc.
Airlines, Local Telecoms, etc.
Dubious Deregulation

Electricity, Western Railways