How much have critical industries in America changed since their deregulation during the 1980s and 1990s? This paper presents a "process model" of the dramatic shifts experienced by key firms and key industries--from state-supported near-monopolies, to the lower prices and greater choice offered by new entrants, to a shakeout period (large mergers, exits) tentatively restoring the earlier "equilibrium."
This process is reviewed, from the experiences of such deregulated industries as: airlines, banking, telecommunications, and electrical utilities, with a more detailed illustration from the banking sector. We trace (1) the initially high volatility, in both their economic performance and management capabilities; followed by (2) the arrival of new entrants (e.g., Southwest Airlines, Nationsbank, CNN, and Enron); and then, (3) a move towards new equilibria, in which the earlier stability is now closely approached and more easily re-established.
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Paper provided by Institute for Policy Resarch at Northwestern University in its series IPR working papers with number
98-13.