Franklin D. Roosevelt, Electric Utilities, and the Power of Competition

Abstract

Historical verdicts on the economic effects of Franklin D. Roosevelt's New Deal have been decidedly mixed. This article examines the New Deal's impact on the electric utility industry. In contrast to Roosevelt's cartel-like policies toward other sectors, his approach to the electric utilities involved the infusion of various forms of direct and indirect competition. Statistical evidence and econometric analysis suggest that Roosevelt's procompetitive strategy produced superior outcomes relative to traditional “natural monopoly” approaches to electric utility regulation.