Introduction

A. Lawrence Kolbe; William B. Tye; Stewart C. Myers

doi:10.1007/978-1-4615-3234-7_1

Regulatory Risk: Economic Principles and Applications to Natural Gas Pipelines and Other Industries pp 1-7 | Cite as

Introduction

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A. Lawrence Kolbe
William B. Tye
Stewart C. Myers

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Part of the Topics in Regulatory Economics and Policy Series book series (TREP, volume 14)

Abstract

This book is the result of an intellectual odyssey going back more than 10 years. For us, the discovery that there was a fundamental flaw in the entire method for evaluating the magnitude of asymmetric risks and compensating investors in regulated industries for bearing those risks came in the early 1980s. At that time, we were working on the seminal case involving oil pipeline regulation before the Federal Energy Regulatory Commission (FERC).

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Economic Principle Cost Recovery Regulatory Risk Regulate Industry Federal Energy Regulatory Commission

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It is perfectly obvious that the concept of “risk” has taken on wholly new dimensions in recent decades and is today being reflected on in ways that would have been almost inconceivable even a few years ago. The older idea, that risk is essentially a wager, which individuals make in the hope of gaining something significant, substantial, has almost disappeared from common parlance. Risk today is conceived principally as danger, great danger, which is not run out of choice and cannot be said to derive from the hazards associated with certain kinds of advanced technology. Increasingly, in the United States perhaps even more than elsewhere, the tendency is to be preoccupied with what are perceived to be the unnecessary risks of contemporary life, against which the individual needs to be protected by the national government (Graubard 1990).

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A. Lawrence Kolbe
- 1
William B. Tye
- 1
Stewart C. Myers
- 2

1.The Brattle GroupUSA
2.Sloan School of ManagementMassachusetts Institute of Technology and The Brattle GroupUSA

Introduction

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