The purpose of this paper is to provide the first comprehensive firm level analysis of cost structures and production in the interstate pipeline industry during the transition from price regulation to partial deregulation, 1977-85. The regulatory changes during this period were numerous and complex. We do not attempt to isolate the impact of any single change in regulation; rather, we examine how the regulatory environment, as a whole, affected the industry. Our study is based on a newly constructed panel of twenty-four interstate pipeline firms. We give particular attention to the impact of output change, technical change, scale economies, and non-optimal input allocation on total factor productivity growth and the implication of the 1978 Natural Gas Policy Act partial price decontrol relative to total wellhead price decontrol for residential, commercial, utility, and industrial consumers of natural gas, and for the transport industry itself.
