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5 J.L. & Econ. 1 (1962)
What Can Regulators Regulate - The Case of Electricity

handle is hein.journals/jlecono5 and id is 3 raw text is: The Journal of LAW &'o ECONOMICS VOLUME V OCTOBER 1962 WHAT CAN REGULATORS REGULATE? THE CASE OF ELECTRICITY GEORGE J. STIGLER and CLAIRE FRIEDLAND University of Chicago THE literature of public regulation is so vast that it must touch on every- thing, but it touches seldom and lightly on the most basic question one can ask about regulation: Does it make a difference in the behavior of an industry? This impertinent question will strike anyone connected with a regulated industry as palpably trivial. Are not important prices regulated? Are not the routes of a trucker and an airline prescribed? Is not entry into public utility industries limited? Is not an endless procession of administrative proceedings aging entrepreneurs and enriching lawyers? But the innumerable regulatory actions are conclusive proof, not of effec- tive regulation, but of the desire to regulate. And if wishes were horses, one would buy stock in a harness factory. The question of the influence of regulation can never be answered by an enumeration of regulatory policies. A thousand statutes now forbid us to do things that we would not dream of doing even if the statutes were repealed: we would not slay our neighbor, or starve our children, or burn our house for the insurance, or erect an abattoir in the back yard. Whether the statutes really have an appreciable effect on actual behavior can only be determined by examining the behavior of people not subject to the statutes. An order to a trucker not to haul goods between cities A and B is even more

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