ABSTRACT
This chapter presents the basic features and values of the institutionalist approach as it evolved through successive phases of historical development. Institutional economists played a major role in developing the rationale and format for government regulation of business enterprise. Institutionalists view monopoly power and oligopoly as an indigenous part of industrialized society and are unwilling to accept the argument that removal of regulation results in the establishment of a competitive industry. The pattern of entry and concentration in the airline industry with total economic deregulation also demonstrates trends that are antithetical to competition. The chapter also presents the neoclassical approach to regulation based on an integration of literature. Neoclassical economics offers various external standards for assessing market dominance and setting prices in cases where captive markets persist. The chapter examines a new generation of problems in energy, telecommunications, and transport to provide a framework for a further evaluation of the potential contribution of each approach.
