Until recently, the need to regulate monopoly was considered virtually axiomatic, and the imposition of rules governing entry, exit and pricing was deemed a priority. The deregulation movement has raised pragmatic questions about these orthodoxies, and, more recently, a new body of economic analysis called the theory of contestable markets has provided a conceptual basis for the view that many markets that are subject to economies of scale should not be regulated by the conventional methods.
Elizabeth E. Bailey & William J. Baumol,
Deregulation and the Theory of Contestable Markets,
Yale J. on Reg.
Available at: http://digitalcommons.law.yale.edu/yjreg/vol1/iss2/2