Chapter 19 Experiments in Decentralized Monopoly Restraint

This chapter focuses on laboratory experimental examinations of a particular class of institutions, policies or mechanisms of monopoly control. These are mechanisms which take the existence of a monopoly as a given and ask how might the abuses of monopoly be controlled in a decentralized manner. The most prevalent form of monopoly control in the United States for many decades was cost-based rate of return regulation. The academic and practitioner critics of rate of return regulation were numerous. In general, the arguments were that the incentives in the rate of return regulatory process itself led to distortions relative to standard measures of efficiency. This chapter focuses exclusively on experiments that do more than simply reform centralized price regulation, that is, we examine decentralized forms of monopoly control.