The authority of the federal regulatory agencies falls broadly into three categories. 

Control of Supply.

Some agencies control entry into certain economic activities. The FCC grants radio and television licenses. The FDA (see Chapter 15) decides which drugs may entertheAmerican market, asit did in early 2020 when it approved the first treatment for peanut allergies, which are affecting a growing number of children. The SEC (see Chapter 9) acts as a gatekeeper, preventing the issuance of new securities for sale to the public until certain standards are met. 

Control of Rates. 

Historically, those federal agencies charged with regulating utilities and carriers (Federal Energy Regulatory Commission, ICC, and CAB) set the prices to be charged for the services offered within their jurisdictions, but the deregulation movement resulted in the elimination of the CAB and the ICC and a general decline in agency rate-setting. For example, the federal government decided to eliminate its authority to set the price of airline tickets and the rates charged for cable TV and long-distance telephone calls. 

Questions 

1. The phrase “government regulation” embraces many functions. Define it. 

2. Is the federal regulatory process limited in its goals to the correction of market failures? Should it be so limited? Explain. 

3. According to The Washington Post, self-described “drone slayer” William Merideth of Kentucky saw a drone hovering over his land, so he “grabbed his Benelli M1 Super 90 shotgun, took aim, and unleashed three rounds of birdshot.” The $1,500 drone was downed and its owner, hobbyist John Boggs, who was taking pictures of the scenery, filed suit claiming Merideth had no right to shoot down the drone because the U.S. government controls all airspace. Merideth and witnesses say the drone was flying below the treeline. 

a. Do you think Boggs was trespassing? Why? 

b. How do you feel about widespread drone use, including package delivery to housing units? See Andrea Peterson and Matt McFarland, “You May Be Powerless to Stop a Drone from Hovering over Your Own Yard,” The Washington Post, January 13, 2016 [www.washingtonpost.com].