Alfred E. Kahn: Regulator and Language Maven
- 175 Downloads
Alfred Kahn’s enduring legacy will be his influence on how economists think about the regulation of natural monopoly. But although the substance of his ideas mattered far more than their style, his influence would not have been nearly as great had it not been for his almost slavish devotion to clear language. His career supports the proposition that most of the heavy lifting in economics relies on just a few basic principles that can be stated in plain English. In this essay, I describe how Kahn’s mastery of those principles made him such an effective regulator, but I also note that events since the 1978 deregulation of the airline industry suggest that he and others at the Civil Aeronautics Board failed to appreciate the extent of unexploited economies of scale in the industry.
KeywordsAlfred Kahn Airline regulation Marginal cost pricing Economies of scale Natural monopoly
- Baumol, W. J., Bailey, E. E., & Willig, R. D. (1977). Weak invisible-hand theorems on the sustainability of multiproduct natural monopoly. American Economic Review, 67, 350–365.Google Scholar
- Borenstein, S. (1989). Hubs and high fares: Dominance and market power in the U.S. airline industry. Rand Journal of Economics, 20(3), 344–365.Google Scholar
- Frank, R. H. (1980). Scale economies and future board policy toward mergers. Civil Aeronautics Board Internal Memorandum.Google Scholar
- Frank, R. H. (1983a). Economies of scale and the winds of change. Cornell University, Department of Economics (unpublished paper).Google Scholar
- Frank, R. H. (1983b). When are price differentials discriminatory?. Journal of Policy Analysis and Management 2(2), 238–255 (Winter).Google Scholar
- Kahn, A. E. (1971). The economics of regulation. New York: Wiley.Google Scholar
- Kahn, A. E. (1977). The style of board orders and chairman’s letters. Memo to Civil Aeronautics Board Staff. http://www.lettersofnote.com/2011/04/on-bureaucratese-and-gobbledygook.html.
- Kahn, A. E. (2007). Net neutrality. AEI-brookings joint center working paper no. RP07-05. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=973513.
- Levine, M. E. (1981). Revisionism revisited: Airline deregulation and the public interest. Law and Contemporary Problems 44, 179–195.Google Scholar
- McCraw, T. K. (1984). Prophets of regulation. Cambridge, MA: Belknap Press of Harvard University Press.Google Scholar
- White, L. J. (1979). Economies of scale and the question of natural monopoly in the airline industry. Journal of Air Law and Commerce, 44(3), 545–573.Google Scholar
- United States Senate. (1976). Civil aeronautics board practices and procedures: Report of the subcommittee on administrative practice and procedure of the committee on the judiciary of the United States Senate, USGPO.Google Scholar