I remember reading somewhere, probably a Brookings study, that airline productivity grew in the 1960s as a result of the switch from propeller planes to jets. Presumably prices fell for the same reason. But after jets were diffused throughout the industry, technological change could no longer be counted on for productivity improvements or price declines.
Also, the counterfactuals are important. No one (other than economists) could explain why Southwest charged so much less for trips between city pairs in Texas and California than other airlines charged for trips of the same distance in interstate commerce. Steven Breyer (now Justice) does a nice job of explaining this in his book Regulation and its Reform. Breyer was chief counsel of Ted Kennedy's committee that helped set the stage for deregulation. As to cable TV, I believe that if you adjust for the number of channels subscribers get, the real cost/channel has fallen. There are probably other stories for the other industries that CU claims have not benefited consumers. ----Art Woolf On Mon, 10 Jun 2002, Robin Hanson wrote: > The July 2002 issue of Consumer Reports (not yet on their website) has an > article on p.30 on "Deregulation" with a summary "Why consumers suffer most > in a free market - and what you can do about it." Their strongest argument > is a graph on p.30 on titled "Prices: A long-term decline. Consumer > prices often fell after deregulation. But inflation-adjusted prices were > falling for decades before, typically at a faster rate." The chart shows > prices for airlines, local telephone, long distance, cable TV, and > electricity from 1950 to 2000, which are roughly supportive of their claim. > > Is there a rebuttal to this somewhere? > > > Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu > Asst. Prof. Economics, George Mason University > MSN 1D3, Carow Hall, Fairfax VA 22030-4444 > 703-993-2326 FAX: 703-993-2323 > ******************************************************************** Art Woolf Phone: (802) 656-4711 Vermont Council on Economic Education 219 Kalkin Hall University of Vermont email: [EMAIL PROTECTED] Burlington, VT 05405 website: www.bsad.uvm.edu/vcee
