I would say the relevant test in this context is whether the product kept flowing to customers at prices that covered production costs. The California crisis is clearly an example of consumptis interruptis, but no role of Enron's bankruptcy in that crisis has been raised, as far as I know. So I see no downside in the Enron affair as far as market failure is concerned. Whether it was overhyped by some conservative commentators is another matter.
If I was looking around for market failure, my first impulse would be on concentration and the restricted output, high prices, and inequitable distribution of rents associated with them. Also up there would be the proliferation of external costs and failure of government to deal with them. mbs Max, nicely clear statement, isn't there another issue here? Enron supposedly "proved" that market forces were superior to government regulation. It could create low prices for consumers and lush profits for investors. Michael Perelman
