Revisionism Revised? Airline Deregulation and the Public Interest

This paper calls for a reexamination of modern theories of regulation in the light of recent deregulation activity. Modern "revisionist" theories of regulation are derived from Downs' demonstration that a public official will maximize his own welfare by pursuing policies which provide identifiable benefits to groups which are well-organized politically. Various commentators have explained the fact that much regulation is inefficient by showing that there are groups that benefit from the inefficient regulation and that those groups support both establishing and continuing regulation. These theories are couched in terms that do not predict or account for the dismantling of any regulatory scheme which is providing benefits to some groups at the expense of the general public. Unfortunately for this view of the process, the last several years have seen deregulation of airlines, trucking, brokerage commissions, cable television, and others. Perhaps "bad" regulation is the product of mistakes rather than the inevitable product of a democratic political system. Airline deregulation is examined in detail and seems to support resurrection in modified form of the "public interest" theory of regulatory origin previously thought obsolete.