Stigler's Theory of Regulation

Russell Roberts posted a nice blog yesterday on the licensing of taxis in Montgomery County, MD. Old gus enjoyed it very much, and I recommend that you read the entire post. Anyway, while old Gus was reading the beginning of the post, the obvious question that I kept asking myself was: "what would Stigler say?" Well, by the end of the post, Roberts reveals the answer to the question. It turns out that there is already a virtual monopolist provider of taxi service in Montgomery County (Barwood Inc.). In addition, the Washington Post article that Roberts cites reveals the following about this monopoly firm, and its relationship to Douglas Duncan, the County Executive: The company is owned by Lee Barnes, a Duncan campaign contributor and a member of the county board that regulates the industry. He holds -- directly or through affiliates -- 434 of the 580 taxi licenses in Montgomery. So here is some rent-seeking and rent-protection in action! One other thing about this fellow Russell Roberts. He is the author of the very fine romance novel entitled The Invisible Heart. A very entertaining read for all econ students. OldGus enjoyed it, even though the central character is an economist, not old prospector!