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Why do regulators regulate? The case of the southern California gas market

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Abstract

Cross-subsidies often accompany entry regulation. Because cross-subsidies may be efficient or inefficient, they make it harder to find out whether regulation is motivated by “public interest” or “public choice” considerations. This paper uses case study methods to illuminate the motives and intentions of California state regulators in a battle over bypass of state-regulated gas utilities during the 1980s. Detailed study reveals that wealth redistribution, rather than economic efficiency, dominated regulators' motives.

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Authors and Affiliations

  1. Program on Social & Organizational Learning, George Mason University, 4084 University Dr., Suite 206, 22030, Fairfax, VA

    Jerry Ellig

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  1. Jerry Ellig
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The author would like to thank John Baden, Robert Bradley, Charles Rowley, several anonymous referees, and participants in the Center for Market Processes colloquium for helpful comments; Mike McDonald, Lisa Johnson, Gary Shiu, Bob Baldini, and Don Dempsey for research assistance; and the Center for Market Processes for financial support.

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Ellig, J. Why do regulators regulate? The case of the southern California gas market. J Regul Econ 7, 293–308 (1995). https://doi.org/10.1007/BF01067099

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