regulation was not working well. The United States carried out a great policy experiment—the deregulation

that we discussed in Monopoly—removing government controls over prices and quantities produced in

airlines, railroads, trucking, intercity bus travel, natural gas, and bank interest rates. The Clear It Up discusses

the outcome of deregulation in one industry in particular—airlines.

CLEAR IT UP

What are the results of airline deregulation?
Why did the pendulum swing in favor of deregulation? Consider the airline industry. In the early days of air travel, no

airline could make a profit just by flying passengers. Airlines needed something else to carry and the Postal Service

provided that something with airmail. Thus, the first U.S. government regulation of the airline industry happened

through the Postal Service, when in 1926 the Postmaster General began giving airlines permission to fly certain
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