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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
VOLUME V                                           OCTOBER 1962
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things that we would not dream of doing even if the statutes were repealed: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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