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Book contents
- Frontmatter
- Contents
- Preface
- About the Authors
- Deregulatory Takings and the Regulatory Contract
- 1 The Nature of the Controversy
- 2 Deregulation and Network Pricing
- 3 Quarantines and Quagmires
- 4 The Regulatory Contract
- 5 Remedies for Breach of the Regulatory Contract
- 6 Takings and the Property of the Regulated Utility
- 7 Just Compensation for Deregulatory Takings
- 8 The Efficient Component-Pricing Rule
- 9 The Market-Determined Efficient Component-Pricing Rule
- 10 Answering the Critics of Efficient Component Pricing
- 11 The Equivalence Principle
- 12 TSLRIC Pricing and the Fallacy of Forward-Looking Costs
- 13 Deregulatory Takings and Efficient Capital Markets
- 14 Limiting Principles for Stranded Cost Recovery
- 15 Deregulation and Managed Competition in Network Industries
- 16 The Tragedy of the Telecommons
- References
- Case Index
- Name Index
- Subject Index
6 - Takings and the Property of the Regulated Utility
Published online by Cambridge University Press: 29 October 2009
- Frontmatter
- Contents
- Preface
- About the Authors
- Deregulatory Takings and the Regulatory Contract
- 1 The Nature of the Controversy
- 2 Deregulation and Network Pricing
- 3 Quarantines and Quagmires
- 4 The Regulatory Contract
- 5 Remedies for Breach of the Regulatory Contract
- 6 Takings and the Property of the Regulated Utility
- 7 Just Compensation for Deregulatory Takings
- 8 The Efficient Component-Pricing Rule
- 9 The Market-Determined Efficient Component-Pricing Rule
- 10 Answering the Critics of Efficient Component Pricing
- 11 The Equivalence Principle
- 12 TSLRIC Pricing and the Fallacy of Forward-Looking Costs
- 13 Deregulatory Takings and Efficient Capital Markets
- 14 Limiting Principles for Stranded Cost Recovery
- 15 Deregulation and Managed Competition in Network Industries
- 16 The Tragedy of the Telecommons
- References
- Case Index
- Name Index
- Subject Index
Summary
THE SUPREME COURT has placed takings cases into three categories. In declining order of judicial solicitude given the property owner, the categories are physical invasions of property, confiscatory public utility rates, and regulatory takings. Breach of the regulatory contract does not fit automatically into any one of those categories because, being unprecedented, it necessarily is a case of first impression under the Takings Clause. That is true even with respect to the precedents addressing public utility regulation. Although arguments can be made for and against recovery of stranded costs, ultimately the Supreme Court (and its counterpart in other nations) will have to rely on first principles of legal and economic theory to decide whether to recognize a deregulatory taking as an event necessitating the state's payment of just compensation. Those principles, we argue here, support such payment. We then examine the Court's reasoning under each of its three doctrinal branches of takings jurisprudence to determine the extent to which a deregulatory taking can be analogized to cases decided under those doctrines. We conclude that under all three branches of existing takings jurisprudence the regulator's abrogation of the regulatory contract is a compensable confiscation of the property of the regulated firm.
ECONOMIC RATIONALES FOR PROPERTY PROTECTIONS
It is difficult to imagine a market economy without legal protections for private property. The definition and enforcement of property rights are the legal foundation of a market economy. The economic functions of property rights are several.
Completeness, Exclusivity, and Transferability As Prerequisites of Allocative Efficiency
Clearly defined property rights are necessary for the exchange of goods and services between individuals.
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- Chapter
- Information
- Deregulatory Takings and the Regulatory ContractThe Competitive Transformation of Network Industries in the United States, pp. 213 - 272Publisher: Cambridge University PressPrint publication year: 1997