From Rent-Seeking Activities to Economic Activities: The Strategic Transformation of the Deregulated Firm
Abstract
The political theory of regulation holds that deregulation of utilities obliges the former monopoly to abandon its rent-seeking activities to concentrate upon economic activities. However, the arguments presented by scholars to explain this strategic transformation are not entirely convincing. We argue in this paper that the role and the nature of the firm during the deregulation process have been underestimated in previous works. After describing the main steps of this process, we thus propose a dynamic explanation of the strategic transformation of the deregulated firm based on the concepts of firm capabilities, access to rents and transaction costs.