The Efficiency Gains from Deregulation
We analyze the efficiency gains from deregulating monopolies using an equilibrium rent seeking model. McCormick, Shughart and Tollison (1984) argue that the initial effort to establish regulation dissipates the monopoly profit, limiting the gain from deregulation to the efficiency cost of monopoly. We establish conditions under which this proposition holds; in particular, the initial rent seekers must fail to anticipate the possibility of deregulation. Additionally, through application of the standard rent seeking model, we establish that the potential welfare gains exceed the cost of achieving deregulation. Our results provide support for policies aimed at eliminating monopoly and other types of economic distortion. Copyright 1997 by Kluwer Academic Publishers
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
When requesting a correction, please mention this item's handle: RePEc:kap:regeco:v:12:y:1997:i:1:p:81-89. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.