Hostname: page-component-7c8c6479df-7qhmt Total loading time: 0 Render date: 2024-03-28T23:17:46.055Z Has data issue: false hasContentIssue false

Corruption, Quasi-Rents, and the Regulation of Electric Utilities

Published online by Cambridge University Press:  01 December 2008

JOHN L. NEUFELD*
Affiliation:
Professor, Department of Economics, University of North Carolina at Greensboro, Box 26165, Greensboro, NC 27402. E-mail: john_neufeld@uncg.edu.

Abstract

Was the adoption of state utility regulation the result of a negative-sum competition among special interest groups vying for the monopoly rents created by regulation or a positive-sum elimination of corruption arising from appropriable quasi-rents? Previous empirical studies of the adoption of regulation have assumed the former. Using discrete hazard analysis, this study considers the latter and finds the data more consistent with the positive-sum protection of quasi-rents than the negative-sum creation and appropriation of monopoly rents.

Type
ARTICLES
Copyright
Copyright © The Economic History Association 2008

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Alchian, Armen. “Rent.” In The New Palgrave: A Dictionary of Economics, edited by Eatwell, John, Milgate, Murray, and Newman, Peter, 141–43. New York: The Stockton Press, 1987.Google Scholar
Anderson, Gary M., Rowley, Charles K., & Tollison, Robert D.. “Rent Seeking and the Restriction of Human Exchange” The Journal of Legal Studies 17, no. 1 (1988): 83100.CrossRefGoogle Scholar
Atlanta Constitution, various dates.Google Scholar
Carter, Susan et al., eds. Historical Statistics of the United States: Earliest Times to the Present. Millennial ed. Vol. 1. New York: Cambridge University Press, 2006.Google Scholar
Congressional Quarterly Inc. Congressional Quarterly's Guide to U.S. Elections. 3rd ed.Washington, DC: Congressional Quarterly, 1994.Google Scholar
Creamer, Daniel Barnett, Dobrovolsky, Sergei P., and Borenstein, Israel. Capital in Manufacturing and Mining: Its Formation and Financing. Princeton, NJ: Princeton University Press, 1960.CrossRefGoogle Scholar
Eisenmenger, Hugo Emil.Central Station Rates in Theory and Practice. Chicago: Frederick J. Drake & Co., 1921.Google Scholar
Etzioni, Amitai.“Does Regulation Reduce Electricity Rates? A Research Note” Policy Sciences 19, no. 4 (1986): 349–57.Google Scholar
Fisher, Walter L. “The American Municipality” In Municipal and Private Operation of Public Utilities: Report to the National Civic Federation, 3342. New York: National Civic Federation, 1907.Google Scholar
Goldberg, Victor P.“Regulation and Administered Contracts” The Bell Journal of Economics 7, no. 2 (1976): 426–48.CrossRefGoogle Scholar
Hausman, William, & Neufeld, John. “The Market for Capital and the Origins of State Regulation of Electric Utilities in the United States.” This Journal 62, no. 4 (2002): 1050–73.Google Scholar
Insull, Samuel. “Presidential Address.” Paper presented at the 21st Convention of the National Electric Light Association, Chicago, June 7–9, 1898. Chicago: The James Kempster Printing Co., 14–30.Google Scholar
Jarrell, Gregg A.“The Demand for State Regulation of the Electric Utility Industry” Journal of Law and Economics 21, no. 1 (1978): 269–95.Google Scholar
Jarrell, Gregg A.“Pro-Producer Regulation and Accounting for Assets: The Case of Electric Utilities” Journal of Accounting and Economics 1, no. 2 (1979): 93116.CrossRefGoogle Scholar
Klein, Benjamin, Crawford, Robert G., & Alchian, Armen A.. “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process” Journal of Law and Economics 21, no. 2 (1978): 297326.CrossRefGoogle Scholar
Knittel, Christopher R.“The Adoption of State Electricity Regulation: The Role of Interest Groups” Journal of Industrial Economics 54, no. 2 (2006): 201–22.CrossRefGoogle Scholar
Levy, Brian, & Spiller, Pablo T.. “The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation” Journal of Law, Economics, and Organization 10, no. 2 (1994): 201–46.Google Scholar
McCormick, Richard L.“The Discovery That Business Corrupts Politics: A Reappraisal of the Origins of Progressivism” American Historical Review 86, no. 2 (1981): 247–74.CrossRefGoogle Scholar
McDonald, Forrest.Insull. Chicago: University of Chicago Press, 1962.Google Scholar
Miller, George H.Railroads and the Granger Laws. Madison: University of Wisconsin Press, 1971.Google Scholar
Mowry, George Edwin.The California Progressives, Chronicles of California. Berkeley: University of California Press, 1951.Google Scholar
National Civic Federation. Municipal and Private Operation of Public Utilities: Report to the National Civic Federation Commission on Public Ownership and Operation. Part I–Vol. I: General Conclusions and Reports. New York: National Civic Federation, 1907.Google Scholar
National Civic Federation. Municipal and Private Operation of Public Utilities: Report to the National Civic Federation Commission on Public Ownership and Operation. Part II–Volume I: Report of Experts—United States. New York: National Civic Federation, 1907.Google Scholar
Neufeld, John L.“Price Discrimination and the Adoption of the Electricity Demand Charge.” This Journal 47, no. 3 (1987): 693709.Google Scholar
New York Times, various dates.Google Scholar
Priest, George L.“The Origins of Utility Regulation and the ‘Theories of Regulation’ Debate” Journal of Law and Economics 36, no. 1, part 2 (1993): 289323.Google Scholar
Primeaux, Walter J.“What Can Regulators Regulate? The Case of Electric Utility Rates of Return” Managerial and Decision Economics 9, no. 2 (1988): 145–52.Google Scholar
Savitski, David W.“Initial State Regulation of Investor-Owned Utilities” Energy Economics 23, no. 6 (2001): 683–95.CrossRefGoogle Scholar
Smalley, Harrison Standish.“Railroad Rate Control” Publications of the American Economic Association, 3rd series, 7, no. 2 (1906): 327473.Google Scholar
Steffens, Lincoln.The Shame of the Cities. New York: McClure, Phillips & Co., 1904.Google Scholar
Stigler, George J., & Friedland, Claire. “What Can Regulators Regulate? The Case of Electricity” Journal of Law and Economics 5 (1962): 116.Google Scholar
Tollison, Robert. “Regulation and Interest Groups.” In Regulation Economic Theory and History, edited by High, Jack, 5976. Ann Arbor: University of Michigan, 1991.Google Scholar
Troesken, Werner.Why Regulate Utilities? The New Institutional Economics and the Chicago Gas Industry, 1849–1924. Ann Arbor: University of Michigan Press, 1996.Google Scholar
Troesken, Werner.“The Sources of Public Ownership: Historical Evidence from the Gas Industry” Journal of Law, Economics, and Organization 13, no. 1 (1997): 125.Google Scholar
Troesken, Werner. “Regime Change and Corruption: A History of Public Utility Regulation.” In Corruption and Reform: Lessons from America's Economic History, edited by Glaeser, Edward L. and Goldin, Claudia, 259–81. Chicago: University of Chicago Press, 2006.Google Scholar
Troesken, Werner, & Geddes, Rick. “Municipalizing American Waterworks, 1897–1915” Journal of Law, Economics, and Organization 19, no. 2 (2003): 373400.Google Scholar
Ulmer, Melville J.Capital in Transportation, Communications, and Public Utilities: Its Formation and Financing, National Bureau of Economic Research Studies in Capital Formation and Financing. Princeton, NJ: Princeton University Press, 1960.Google Scholar
United States Bureau of the Census. Central Electric Light and Power Stations, 1917. Washington, DC: GPO (reprinted 2006, Ross Pub. Inc., NYC), 1920.Google Scholar
United States Bureau of the Census. Central Electric Light and Power Stations, 1922. Washington, DC: GPO (reprinted 2006, Ross Pub. Inc., NYC), 1925.Google Scholar
United States Bureau of the Census. Central Electric Light and Power Stations, 1932. Washington, DC: GPO (reprinted 2006, Ross Pub. Inc., NYC), 1934.Google Scholar
United States Bureau of the Census. Electric Light and Power Industry, 1937. Washington, DC: GPO (reprinted 2006, Ross Pub. Inc., NYC), 1939.Google Scholar
Upadhyaya, Kamal P., Raymond, Jeannie E., & Mixon, Franklin G.. “The Economic Theory of Regulation versus Alternative Theories for the Electric Utilities Industry: A Simultaneous Probit Model” Resource and Energy Economics 19, no. 3 (1997): 191202.Google Scholar
Wall Street Journal, various dates.Google Scholar
Washington Post, various dates.Google Scholar
Wilcox, Delos F.Municipal Franchises. Vol. I. New York: McGraw-Hill, 1910.Google Scholar
Williamson, Oliver E.The Economic Institutions of Capitalism: Firms, Markets, and Relational Contracting. New York: Free Press, 1985.Google Scholar
Wunderlin, Clarence E.Visions of a New Industrial Order: Social Science and Labor Theory in America's Progressive Era. New York: Columbia University Press, 1992.Google Scholar