When a press release gives official notice that a public company is to be sold, a lawsuit objecting to the deal typically is soon filed. The lawsuit names as defendants the target company, its board of directors, and the purchaser. The operative theory is that the target is being sold for too little and that the directors breached their fiduciary duties by agreeing to the sale, with the insidious help of the purchaser. The lawsuit seeks to stop the transaction from proceeding on the terms announced. In this article, NERA Global Securities and Finance Practice Chair Dr. Marcia Kramer Mayer and Wilson Sonsini Goodrich & Rosati Managing Partner Douglas J. Clark, Esq., closely examine a particular litigated merger, Broadcom Corporation's purchase of NetLogic Microsystems, Inc., from start to finish. Because there was nothing exceptional or unique about the deal, the litigation that ensued, or the outcome of that litigation, the reader can draw his or her own conclusions as to whether this activity creates value for stockholders or advances the cause of corporate governance.

This article first appeared on boardmember.com on 6 February 2012, and is used here with the permission of Corporate Board Member and NYSE Euronext.

The recent financial crisis was marked by the highest unemployment rates that the US has witnessed in more than 25 years, with the number of workers displaced from jobs that they held for at least three years doubling during the period from January 2007 through December 2009, relative to the period from January 2005 through December 2007. At the same time, there was substantial growth in the rate of wrongful termination filings claiming discrimination, leading to an increased likelihood during the recession that a displaced worker would bring a wrongful termination claim. In this NERA paper, Senior Consultants Dr. Laila Haider and Dr. Stephanie Plancich evaluate the impact of the economic downturn in the estimation of alleged damages for wrongful termination claims. Although, in aggregate, more wrongful termination claims stemming from discrimination were brought during the recent recession, any individual claim must be evaluated on its own merits. To do such an evaluation, Dr. Haider and Dr. Plancich identify each of the several inputs that go into the calculation of economic loss and evaluate how each input may be affected by the economic downturn. Using several stylized illustrations and examples, the authors show that, for any individual case, the economic downturn may imply either higher or lower alleged damages than would have been expected in the absence of the recession.

Shareholder class actions can have significant consequences for defendant issuers. Although there have yet to be any judgments against an issuer in a shareholder class action in Canada, there have been many settlements. In this article from Class Action Defence Quarterly, NERA Vice President Bradley A. Heys discusses how, when considering economic damages in such cases, there are many issues that can arise for which an economist can employ a wide range of tools and techniques to estimate damages and enable litigants to make more informed decisions. Mr. Heys describes the factors that influence settlement amounts in these cases; the types of analyses that can be used to separate out potential damages from shareholder losses that are unrelated to the alleged misrepresentations or omissions; and how aggregate class-wide damages might be estimated in the absence of shareholder-specific information.

Reprinted by permission of LexisNexis Canada Inc., from the Class Action Defence Quarterly, Edited by Kathryn Chalmers, Copyright 2012.

Cases alleging wage and hour violations are an ongoing source of potential liability for employers in the United States. A significant number of these cases continue to be filed, both in state and federal court, and companies continue to pay substantial settlements. In this update to NERA's ongoing analysis of settlements in wage and hour cases, Senior Vice President Dr. Denise Martin, Senior Consultant Dr. Stephanie Plancich, and Senior Analyst Janeen McIntosh expand their analysis to include cases settled in 2011. The authors find that aggregate settlement amounts for wage and hour cases have decreased in 2011: the mean settlement amount was $4.6 million for cases settled in 2011, lower than the mean in the prior four years. However, the pattern is different after controlling for the number of plaintiffs in the class and the length of the class period. The average per-plaintiff settlement amount has remained relatively steady at approximately $5,000 from 2009-2011, and the average per-plaintiff per-class period year settlement has increased from approximately $900 in the 2007-2010 period to $1,500 in 2011.

The number of people currently holding student debt is staggering: 37 million Americans and counting. These debtors are concentrated in the younger segment of the population, as more than 60 percent of the total are between the ages of 18 and 39. One of the most worrisome student borrowing trends is the increase in the number of high-debt borrowers who carry debt loads far above $25,000, the national average amongst undergraduate student borrowers. Student debt loads of $50,000, $100,000, and $200,000 are still the minority, but those high figures are becoming more common, and with unknown consequences for the individual debtors or the economy as a whole. Despite this, we know remarkably little about these high-debt borrowers. In particular, we do not know about the "loan literacy" they had or did not have when making the choice to take out such large amounts of student debt. Understanding the decision-making process of these borrowers is critical to inform policymakers as they make evidence-based considerations of potential responses.

In this report, produced on behalf of Young Invincibles, NERA Senior Analyst Healey Whitsett takes a first look at the experiences of high-debt borrowers by analyzing survey data from about 6,500 undergraduate and graduate student loan borrowers, fully 25 percent of which have outstanding loan balances at or exceeding $100,000. The population that participated in the survey therefore provides insight into the experiences of the 5 percent of borrowers in the United States with the highest debt levels. The report's analysis aims to determine the factors that high-debt borrowers did not understand when making their loan decisions, and the loan characteristics they said influenced their decision-making.

In this article from BNA International's Transfer Pricing Forum, NERA Vice President Sébastien Gonnet and Julien Monsenego, Tax Partner at Olswang France LLP, provide an overview of the French Tax Authorities' interpretation of recent transfer pricing developments, with a particular focus on the revised OECD Guidelines. The authors also discuss the latest documentation requirements, approaches to dealing with transfer pricing disputes, and the most commonly used methods to adjust taxpayers’ transfer prices in France.

The landscape for US carbon policy has evolved significantly over the past several years. As recently as 2009, there were multiple legislative proposals moving through Congress aimed at establishing a national cap-and-trade system for reducing carbon emissions throughout the economy. However, in the wake of the financial crisis and shifting political sentiments, these market-based economic instruments have more or less been scrapped and replaced with proposals for command-and-control regulatory mandate frameworks. The variety of specific and potentially overlapping regulatory regimes creates a complex policy landscape with many potential unforeseen risks and unintended impacts. In this NERA paper, Senior Consultant Dr. Sugandha D. Tuladhar, Consultant Sebastian Mankowski, and Vice President Scott Bloomberg evaluate the impacts of different types of carbon policies, such as cap-and-trade and non-market based mandates (command and control policies) that are aimed at the electric power and transportation sectors. Key to this evaluation is a series of comparisons of the costs and benefits resultant from implementation of these different policies. Using the N_ewERA model, NERA's proprietary energy, economic, and environmental policy analysis tool, the authors explore four such potential policies and compare them against a baseline without any carbon policies. The authors find that each of the policies they examined has costs that extend beyond their targeted sector(s). These costs have significant macroeconomic implications, including a loss of purchasing power for households due to higher energy costs and decreased wages and/or lower levels of employment.

On 13 March 2012, NERA Vice President Dr. Sharon Brown-Hruska and Senior Consultant Kurt Strunk submitted an Energy Policy Briefing Note to the Commodity Futures Trading Commission (CFTC) entitled "The Real Costs of Eliminating Unsecured Credit Lines and Requiring Cash Collateral in OTC Swaps Markets." The note further describes the methodology and approach used for calculating the cost of capital in their study, "Cost-Benefit Analysis of the CFTC's Proposed Swap Dealer Definition," which Dr. Brown-Hruska and Mr. Strunk prepared for the Working Group of Commercial Energy Firms. The report analyzes the incremental costs and benefits associated with the CFTC's proposed definition of "Swap Dealer" under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The NERA team performed a detailed analysis of the activities that will be required of entities designated as Swap Dealers by the CFTC and developed estimates of the costs for Nonfinancial Energy Companies to comply with the associated proposed CFTC regulations. NERA also analyzed the potential benefits of the CFTC’s proposed regulation of Nonfinancial Energy Companies falling under the definition of "Swap Dealer." The report's cost-benefit analysis demonstrates that the proposed expansive definition of "Swap Dealer" is contrary to the public interest. Under the proposed rulemakings, Nonfinancial Energy Companies that fall within the definition of "Swap Dealer" will face significant increases in incremental costs, while little or no incremental benefit will accrue to over-the-counter (OTC) energy swaps markets and users of OTC energy swaps.

NERA Vice President Dr. James A. Overdahl is participating in an online Economist Debate this week on high-frequency trading. In Economist Debates, experts in the issue at hand take opposing sides in a three-round debate overseen by a moderator. Dr. Overdahl, former Chief Economist for both the US Securities and Exchange Commission and the US Commodity Futures Trading Commission, is defending the following proposition: "This house believes that high-frequency trading contributes to the overall quality of markets." Seth Merrin of Liquidnet is arguing the opposing side. Each side has three chances to persuade readers: opening, rebuttal, and closing. Those who wish to follow along with the debate can do so on the Economist website, and are encouraged to participate by addressing comments to the moderator, and by voting to determine the debate's winner. The moderator will single out the most compelling comments for discussion by the speakers. Opening statements have been posted on the Economist website, and the debate will continue over the next week. 

In this NERA paper, Vice Presidents James Heidell and Sandra Ringelstetter Ennis examine the US Federal Energy Regulatory Commission’s (FERC) Order 1000, which addresses a wide range of policy issues, including provisions that may prove beneficial to advance transmission projects for renewable energy and other merchant power projects. These provisions relate to limitations on incumbent utilities' right of first refusal to develop transmission projects, the requirement for regional transmission organizations to file tariff provisions related to policies and procedures for addressing cost allocation, and the inclusion of public policy considerations in the cost benefit analysis for transmission projects. The order extends the framework for cost allocation defined in Order 890, introduces public policy as a new component of the benefits assessment, and has new pro forma tariff requirements related to regional cooperation and cost allocation. Mr. Heidell and Ms. Ringelstetter Ennis note that the FERC Order is widely viewed as an opportunity to approve and fund more transmission projects associated with renewable resources (siting issues aside). As a result of Order 1000, the evaluation of a transmission project’s benefits can extend beyond the traditional calculations of reliability, congestion reduction, and power price reductions. However, the authors note, the inclusion of public policy may result in a large number of proposed projects claiming either unrealistically high benefit-to-cost ratios, or benefits disproportionate to traditional reliability projects. The implications of including this new category of benefits is uncertain and will be influenced by the actual compliance tariff filings and the inevitable law suits. This paper provides a high-level summary of FERC Order 1000 as it relates to the issues of public policy benefits and cost allocation.

In this article, published in the 29 February 2012 edition of TP Week, NERA Vice President Sébastien Gonnet and Consultant Molvin Yiu provide an overview of the latest anti-avoidance measures of China's State Administration of Taxation (SAT). These measures include administrative guidelines to standardize anti-avoidance efforts across different regions and a new statistical indicator system to review tax payer information and profitability. The authors note that these developments in China confirm a higher transfer pricing scrutiny, a deepening of the overall transfer pricing knowledge, and an announced commitment to transfer pricing going forward. The authors examine the most recent advance pricing agreement (APA) and mutual agreement procedure (MAP) figures, which confirm the low success rate for candidates to Bilateral APAs. This may be explained by the relatively limited resources of the SAT's Anti-Avoidance team in Beijing, as well as different views put forward by Chinese SAT (notably with respect to local intangibles, market premium, and location savings), which may lead to some challenges when concluding negotiations with trading partners (developed economies) with more traditional transfer pricing views.

On 16 December 2011, the US Environmental Protection Agency (EPA) released its final Mercury and Air Toxics Standards (MATS) Rule, accompanied by a Regulatory Impact Analysis (RIA) that reported that the incremental cost to the US electricity sector would be $9.6 billion per year in 2015. This is a large cost to the US economy and, therefore, the Rule merits close examination. In this paper, several members of NERA's Environment and Climate Change Group -- Senior Vice President Dr. Anne E. Smith, Vice President Scott Bloomberg, Senior Consultants Dr. Paul Bernstein and Dr. Sugandha Tuladhar, and Consultant Sebastian Mankowski -- analyze the economic impacts of the MATS Rule. Their analysis is designed to generally match the EPA assumptions in its own analysis, and to offer a broader range of insights about the impacts of that Rule than EPA provided in its RIA. This paper briefly summarizes the approach in the authors' MATS analysis, compares their results to those that EPA has reported, and provides some further results that are available from the authors' own analysis. The authors also provide insight into the overall economy-wide impacts of the Rule that can be expected to result from the costs that the US electric sector is projected to bear under the MATS Rule.

In this article from The Electricity Journal, NERA Senior Consultant Wayne P. Olson surveys three crucial aspects of public utility regulation: fairness, financial autonomy, and independence. Mr. Olson begins by discussing how, because there is no easy way to allocate costs "fairly," issues such as electric transmission cost allocation are vexing for regulators. Another important aspect of regulation that Mr. Olson discusses is a public utility's ability to achieve financial autonomy, which is needed to support private investment. South Africa's municipal electric distribution utilities are prime examples of the problems that can be caused by the lack of financial separation (ring-fencing) between a municipal utility and the other parts of municipal government. Finally, Mr. Olson discusses regulatory independence, which can be achieved through the balancing of authority and accountability. The Federal Housing Finance Authority, for example, has had the interesting task of balancing these factors in recent years. Overall, public policy toward public utilities is largely a question of how best to set up durable institutions and governance structures to support investment by the public utility, thereby allowing the public utility to meet its obligation to provide efficient, safe, adequate, and reliable service in the short and long terms.

Insurance policy underwriters and litigators in securities class actions place importance on the total amount of coverage, but also focus on where their coverage stands in the insurance tower. In the event of a securities class action, predicted settlement analysis estimates the total expected payout in the event of a settlement. However, each insurer's placement in the tower of coverage is crucial to understanding what the predicted settlement means for them. A given expected settlement can imply either a near-certain full payout on a policy underwritten by an insurer or a probability of any payout close to zero. In this NERA paper, Senior Vice President Dr. Patrick Conroy and Senior Consultant Dr. Jordan Milev discuss a new tool called Coverage Tower Analysis. The tool is based on NERA’s predicted settlement model and quantifies the underwriter’s expected payout and incentives driven by the probabilities that a settlement will fall in a specific tier of the insurance tower.

An important decision in litigation—one no doubt informed by an understanding of the evidence and relevant legal issues—is how to evaluate the settlement value of a case. This decision will generally come up first in evaluating a case and will typically become more prominent when a party considers making a settlement offer or deciding whether to accept or reject an offer from an opposing party. There may also be additional instances in which the size of a settlement will be considered, such as when a potential acquirer evaluates the purchase of a company with outstanding legal issues, or if the size of a proposed settlement leads to a coverage dispute between the insured and its carriers. Consequently, many parties have a desire for a methodology for estimating settlement values that is both accurate and convincing. This NERA paper, by Senior Vice President Dr. David Tabak, examines the approaches to estimating and evaluating settlements, which can range from subjective to objective. At one extreme is the purely subjective analysis that may be conducted by an experienced professional, such as a lawyer, judge, or mediator. At the other is the objective quantitative analysis performed by a statistician or econometrician. Dr. Tabak discusses the benefits and drawbacks to both approaches, which vary depending on the circumstances in which they are used.

UK energy company RWE npower commissioned a NERA team led by Director Sean Gammons and Senior Consultant Richard Druce to conduct an independent review of the latest proposals for reform in the context of Project TransmiT, Ofgem's fundamental review of electricity transmission charging and access arrangements in Great Britain. In this report, Mr. Gammons and Mr. Druce review Ofgem's latest Project TransmiT consultation document, which contains Ofgem's initial assessment of three charging models for the British electricity transmission network. The report appraises Ofgem's proposals to rule out socialized transmission charging, provides a detailed appraisal of the "improved ICRP" charging regime, and examines other considerations regarding the case for changing the transmission charging regime.

On 8 February 2012, NERA Senior Vice President Dr. Anne E. Smith delivered testimony at a hearing on "The American Energy Initiative – A Focus on What EPA’s Utility MACT Rule Will Cost U.S. Consumers" before the US House of Representatives Energy and Commerce Committee's Subcommittee on Energy and Power. Dr. Smith was asked to share her perspective on the costs, economic impacts, and benefits of the Environmental Protection Agency's (EPA) Utility MACT Rule, which seeks to control risks from hazardous air pollutants (HAPs) emitted by coal- and oil-fired electricity generating units (EGUs). In her testimony, Dr. Smith explained how EPA is masking its lack of evidence of risks from EGU HAPs emissions with estimates of "co-benefits" from a non-HAP that EPA already is required to regulate to safe levels under separate provisions of the Clean Air Act. She also noted attributes of those co-benefits estimates that undercut their credibility. She then described NERA's estimates of certain costs and economic impacts of the MACT Rule that EPA has not provided in its own analyses.

On 19 January 2012, the US Sentencing Commission asked for public comment on various topics, including calculations of loss in securities fraud cases. In this NERA working paper, Senior Vice President Dr. David Tabak argues that, if they are to be reasonably accurate, the determinations of loss in cases involving securities fraud must necessarily be somewhat complex because different types of fraudulent schemes result in different types of losses. The paper examines the four methods discussed in the Commission’s request for comments, showing how they can either underestimate or overestimate losses depending on the fraudulent scheme involved. Dr. Tabak then outlines a method that will tend to reduce the degree of inaccuracy, noting, however, that no generic method will be appropriate in all scenarios. Dr. Tabak also explains that, while even more accurate calculations may involve some complexity, there is a rich history of such analyses in civil cases involving securities fraud, as well as a history of case law providing guidance on the types of analyses that experts have performed in order to survive Daubert challenges and to convince a court of the correctness of their conclusions.
 

Climate scientists predict there is a small but real possibility that climate change will lead to civilization-threatening catastrophic events. Economists and policymakers have used integrated assessment models (IAMs) to determine the optimal policy response to climate change. In this article from Climatic Change, NERA Consultant Dr. Noah Kaufman shows that these IAMs should not be used to determine an optimal price for carbon dioxide. Dr. Kaufman uses numerical simulations to estimate risk premiums toward climate catastrophes. Compared to the assumptions found in most IAMs, Dr. Kaufman's assumptions incorporate a more realistic range of uncertainty for both climate catastrophes and societal risk aversion into the model. The resulting range of risk premiums indicates that the conclusions drawn from IAMs that do not incorporate the potential for climate catastrophes are too imprecise to support any particular policy recommendation.

Securities class action filings in Canada reached their highest level to date in 2011, with 15 new filings, according to this newly released edition of NERA's study,  Trends In Canadian Securities Class Actions: 2011 Update. The previous high was 12 filings in 2008.

The study's co-authors, Vice President Bradley A. Heys and Senior Vice President Mark L. Berenblut, report that driving this increase in filings are so called "Bill 198" cases, which are those involving claims in respect of an issuer's continuous disclosure obligations pursuant to PartXXIII.1 of the Ontario Securities Act (OSA) and analogous sections of the other provincial securities acts. Nine of the 15 cases filed in 2011 were Bill 198 cases, compared to the seven filed in 2010.

The study also notes that three of the new filings during 2011 were made against Chinese companies whose shares trade on the TSX or TSX Venture Exchange. These filings are a reflection of one of the major trends driving class action filings in the United States last year. The filings in Canada include the case against Sino-Forest -- one of the highest-profile suits brought against Chinese companies on either side of the border. There are 45 active Canadian securities class actions as of 31 December 2011. These cases represent a total of approximately CAN$24.5 billion in outstanding claims.

NERA has been analyzing trends in securities class actions for more than 15 years. In addition to this Canada Trends report, the firm produces two US Trends studies annually, and reports for the UK, Australia, Japan, and Italy.

At a time when national postal operators are facing many challenges, including falling demand and markets being opened up to competition, privatization is being actively considered as a policy option. In this chapter of a newly-published book, Multi-Modal Competition and the Future of Mail, NERA Associate Director Stuart Holder and Consultant Helen Smith consider whether the benefits of privatization seen in other network industries could be realized in postal industries. They discuss potential differences between public and private firms and how these might affect efficiency, including the profit motive, capital market discipline, ability to finance investments, and industrial relations. The authors then summarize the empirical literature on the impact of these differences, drawing on experience in both the postal industry and other network industries, including telecoms, electricity, and rail. To apply insights from the literature to postal markets, the authors examine the difference between post and other industries, and how these might affect the benefits from privatization. Key differences include the higher labor intensity of the postal industry, the level of competition at the time of privatization, and the role of the post as an essential service with a universal service obligation. The authors conclude that, despite differences with other industries, privatization has a positive role to play in the postal industry in helping firms tackle the challenges of electronic substitution and the need to maintain the universal service.

"Privatization: Could the Benefits Seen in Other Network Industries be Realized in Postal Industries?" was published in Multi-Modal Competition and the Future of Mail, edited by M. Crew and P. Kleindorfer, Edward Elgar, January 2012, chapter 11, pp. 150-164. The book is available for purchase on Amazon.

If casual observation is an accurate indicator, consumers make their mobile purchasing decisions based solely on the type of mobile phone that mobile service providers are offering as part of a bundle of services. This raises the question of whether other service bundle components matter to consumers. In light of increased competition and saturation in the US mobile sector, gaining a deeper understanding of consumer choice is critical not only for the development of effective market strategies but also for policymaking and antitrust investigations. Surprisingly, although there is a large literature addressing various aspects of mobile demand, no prior study has examined this topic from a mobile service bundle perspective. This study, by NERA Vice President Dr. Christian Dippon, uses a stated-preference survey to fill this gap in the literature. It offers direct insights into the demand determinants for mobile service bundles and how subscribers trade off the various bundle components. The design for the conjoint analyses incorporates efficient survey design, which promises most accurate parameter estimates. It is the first application of efficient survey design theory to telecommunication services. It is also one of the first practical applications of this innovative concept.

The fitted model reveals several interesting competitive and public policy findings. In terms of competition, the fitted model explores several competitive strategies, simulating market share gains and losses from changes in attribute levels and calculating demand elasticities for specific bundle components. This analysis reveals that only certain pricing strategies are effective. It also demonstrates that a combinatorial strategy might be most effective. Specifically, decreasing mobile phone prices, increasing term lengths, and increasing the monthly recurring charge increases subscriber revenue in addition to gaining market share. In terms of public policy, the study finds that regulators must examine market behavior and alleged market failures in terms of service bundles. Considering individual bundle attributes on a standalone basis, which is currently the common practice, yields incorrect results. Finally, the fitted model highlights the importance of making additional radio spectrum available to mobile service providers.

As the number of Canadian securities cases continues to grow, issues regarding the materiality of alleged misrepresentations are likely to arise more frequently. Reporting issuers who make misrepresentations to the market may face liability under Canadian securities laws if those misrepresentations are found to be material. Where a misrepresentation can be shown to be immaterial, there is no liability. While in some cases, whether an alleged misrepresentation was material or not may appear to be obvious on its face, in other cases materiality may not always be so obvious. In this article from The Canadian Class Action Review, NERA Vice President Bradley A. Heys describes some of the ways in which economic experts assist counsel, their clients, and the trier of fact by using the tools of finance and valuation theory combined with econometric analysis to provide a relevant and helpful framework for addressing questions of materiality.

The latest report from NERA's ongoing analysis of trends in Securities and Exchange Commission (SEC) enforcement action settlements finds that the SEC reached a total of 682 settlements in fiscal year 2011 (FY11), almost unchanged from 680 settlements in fiscal year 2010. However, while the total number of FY11 settlements remained relatively constant, there has been a substantial shift in the composition of allegations. Since FY09, Trends authors have observed an increase in settlements with financial services firms for misrepresentations to customers or misappropriation of funds, and an offsetting decrease in settlements relating to public company misstatements.

The authors -- Senior Consultant Dr. Max Gulker, Senior Vice President Dr. Elaine Buckberg, and Vice President Dr. James A. Overdahl -- note that the three-year rise in the percentage of SEC settlements involving misrepresentations or misappropriation by financial services firms suggests a shift in the SEC's enforcement focus since the financial crisis began and the Madoff fraud was revealed. These types of settlements accounted for 41.6% of all SEC settlements in FY11, as compared to the FY03-08 average of 23.7%. Illegal offering and market manipulation cases were the second most common in FY11, representing 27.3% of settlements, the highest level since 2005. Public company misstatement settlements continued to decline for a fourth consecutive year, to 10.4% of total settlements, the lowest level since Sarbanes-Oxley was passed.

The report's findings are informed by NERA's proprietary database of settlements in SEC enforcement actions, which is based on litigation releases and administrative proceeding documents. SEC Settlement Trends: 2H11, historical SEC settlements data, and previous SEC settlement trends reports can be viewed on NERA Economic Consulting's Securities Litigation Trends website at www.securitieslitigationtrends.com.

NERA Special Consultant Dr. William E. Taylor and MIT Department of Economics Professor Dr. Jerry Hausman presented a paper on telecommunications deregulation at the American Economic Association's annual meeting, held in Chicago on 6-8 January 2012. The paper was presented during a session entitled "In Remembrance of Alfred E. Kahn: Fred Kahn's Impact on Deregulation and Regulatory Reform." The late Dr. Kahn was a Cornell University Professor, a former advisor to President Carter, the "father of airline deregulation," and a longtime Special Consultant to NERA. This paper discusses how the telecommunations industry was greatly influenced by Dr. Kahn's many publications, his colleagues, students, and admirers, and his numerous testimonies, reports, and affidavits. The paper will appear in the May American Economic Review Papers and Proceedings.