Stated otherwise, no one has the absolute right to exclude when he exerts monopoly power either through a state grant or through natural circumstances — e.g. by owning the only wharf in the only nearby harbor. In these cases, the standard control mechanism is that the firm must supply its goods to all customers at reasonable and nondiscriminatory rates.
The application of this principle is fraught with difficulties in ratemaking that would take extensive administrative expertise to resolve. But one clear principle of traditional ratemaking most relevant here is that a monopolist is always allowed to recover from each class of customers the distinctive cost of service for that group. Ratemaking, on this view, is not a disguised system of cross-subsidy. It is only a way to prevent the exertion of monopoly power against all groups. This view therefore flatly condemns any effort to convert government ratemaking into a tool to force cross-subsidies between groups. The violation of that principle imposes enormous social losses across the board. Once those systematic losses are recognized, the current practice of scouting out targets of opportunity will be seen as the symptom of a much larger problem — the indefensible logic of the ADA itself.
Richard A. Epstein, the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, is the Laurence A. Tisch Professor of Law, New York University Law School, and a senior lecturer at the University of Chicago. His most recent books are Design for Liberty: Private Property, Public Administration, and the Rule of Law (2011), The Case against the Employee Free Choice Act (Hoover Press, 2009) and Supreme Neglect: How to Revive the Constitutional Protection for Private Property (Oxford Press, 2008). This article originally appeared in Defining Ideas, a journal of the Hoover Institution.