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Generation, Deregulation, and Market Power: Will Antitrust Laws Fill the Void?

Fortnightly Magazine - October 15 1996

one that brought you." In electric restructuring, the IPP represented the new kid on the block. Yet, this new suitor may vanish from the scene unless regulators take action. Unless the courts adopt a sui generis approach to the established rules governing "predatory pricing," regulators will find themselves unable to safely cede their active oversight to the antitrust cop on the beat.

In the long run, industries naturally assume the optimal size for the market. Predatory pricing flourishes only in the short term, during periods of market upheaval, such as that now occurring in the electric service industry. During this period, at least while stranded costs are recovered (and perhaps as the quid pro quo for stranded-cost recovery), regulators might consider affirmative action to mitigate price predation that may prove economically undesirable in the long run. t

Stephen L. Teichler is a partner in law firm of Metzger, Hollis, Gordon & Alprin (based in Washington, DC), which represented Hitachi in the Matsushita antitrust litigation.

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