scholarly journals Is Protecting Sunk Investments by Consumers a Key Rationale for Natural Monopoly Regulation?

2009 ◽  
Vol 8 (2) ◽  
Author(s):  
Darryl Biggar
Keyword(s):  
Economic Theory ◽  
Incremental Cost ◽  
Marginal Cost ◽  
Alternative Hypothesis ◽  
Natural Monopoly ◽  
Deadweight Loss ◽  
Monopoly Regulation ◽  
Ramsey Pricing ◽  
Regulated Firm

Why regulate natural monopolies? Conventional economic theory points to the price-marginal cost margin and the ensuing deadweight loss. But this hypothesis does a poor job of explaining the way that regulators behave in practice. This paper proposes an alternative hypothesis: that natural monopoly regulation exists to protect the sunk investments made by consumers of the regulated firm. This hypothesis explains many of the practices of regulators which make little or no sense under conventional economic theory, such as the desire to pursue stable prices, the aversion to Ramsey pricing, and the role of incremental cost as a pricing floor.

Natural Monopoly Regulation

1989 ◽  
Author(s):  
Sanford V. Berg ◽  
John Tschirhart
Keyword(s):  
Natural Monopoly ◽  
Monopoly Regulation

Whatever Happened to the Cambridge Capital Theory Controversies? (With comments by L. Pasinetti, F. Fisher, J. Felipe and J. McCombie, R. Greenfield and reply by the authors)

2009 ◽  
pp. 4-27
Author(s):  
A. Cohen ◽  
G. Harcourt
Keyword(s):  
Economic Theory ◽  
Economic Thought ◽  
Point Of View ◽  
Chronological Order ◽  
Capital Theory

The article written by the well-known theorists and historians of economic thought contains a detailed overview of the Cambridge capital controversy, which had raged from the mid-1950-s through the mid-1970-s. The authors track the origins of the controversy and cover arguments of both sides in chronological order. From their point of view, the discussion hasnt been resolved, and its main underlying aspects were ideological beliefs and fundamental methodological controversies on the nature of equilibrium and on the role of time in economic theory. The article is published with comments written by other leading theoreticians.

Wilfred Ethier. Modern International Economics. New York: W. W. Norton and Company. 1983. xviii + 588 pp.

1988 ◽  
Vol 27 (1) ◽  
pp. 81-83
Author(s):  
Nadeem A. Burney
Keyword(s):  
International Economic ◽  
New York ◽  
Economic Theory ◽  
International Economics ◽  
International Monetary System ◽  
International Markets ◽  
The Past ◽  
Monetary System ◽  
Recent Developments

Its been long recognized that various economies of the world are interlinked through international trade. The experience of the past several years, however, has demonstrated that this economic interdependence is far greater than was previously realized. In this context, the importance of international economic theory as an area distinct from general economics hardly needs any mentioning. What gives international economic theory this distinction is international markets for some goods and effects of national sovereignty on the character of economic activity. Wilfred Ethier's book, which incorporates recent developments in the field, is an excellent addition to textbooks on international economics for one- or twosemester undergraduate courses. The book mostly covers standard topics. A distinguishing feature of this book is its detailed analysis of the flexible exchange rates and a discussion of the various approaches used for their determination. Within each chapter, the author has extensively used facts, figures and major events to clarify the concepts in the light of the theoretical framework. The book also discusses, in a fair amount of detail, the existing international monetary system and the role of various international organizations.

Monopoly Regulation Under Relaxed Pareto Efficiency

2017 ◽  
Vol 5 (2) ◽  
pp. 162-176
Author(s):  
Ismail Saglam
Keyword(s):  
Marginal Cost ◽  
Regulatory Environment ◽  
Pareto Dominance ◽  
Incentive Compatible ◽  
Monopoly Regulation ◽  
Dominance Relationships ◽  
Ex Post ◽  
Ex Ante ◽  
Pareto Axiom ◽  
Set Of Points

Baron and Myerson (BM; 1982, Econometrica, 50(4), 911–930) propose an incentive-compatible, individually rational and ex ante socially optimal direct-revelation mechanism to regulate a monopolistic firm with unknown costs. Their mechanism is not ex post Pareto dominated by any other feasible direct-revelation mechanism. However, there also exist an uncountable number of feasible direct-revelation mechanisms that are not ex post Pareto dominated by the BM mechanism. To investigate whether the BM mechanism remains in the set of ex post undominated mechanisms when the Pareto axiom is slightly weakened, we introduce the ∈-Pareto dominance. This concept requires the relevant dominance relationships to hold in the support of the regulator’s beliefs everywhere except for a set of points of measure ∈, which can be arbitrarily small. We show that a modification of the BM mechanism which always equates the price to the marginal cost can ∈-Pareto dominate the BM mechanism at uncountably many regulatory environments, while it is never ∈-Pareto dominated by the BM mechanism at any regulatory environment.

Mexico's Pre-Revolutionary Reckoning with Railroads

1985 ◽  
Vol 42 (1) ◽  
pp. 1-28 ◽  
Author(s):  
Robert W. Randall
Keyword(s):  
Economic Growth ◽  
Economic Theory ◽  
Transportation Network ◽  
Underdeveloped Country ◽  
Role Of The State ◽  
Economic Interpretation ◽  
Short Run ◽  
Railway System ◽  
Economic Considerations

Economic considerations all but dominate recent historical writing in this country about the railroads of Mexico. Technical matters of construction and operation, as well as the role of the state in both, are touched upon, but economic interpretation, whether of the development of a railway system or of its impact on the nation, is the watchword if not catchword of most writing. Probably the leading example of the dominant approach is Growth against Development: The Economic Impact of Railroads in Porfirian Mexico (Northern Illinois University Press, 1981), by John H. Coatsworth, in which the author concludes that, while “the short run contribution of railroads to economic growth was large,” their longrun impact helped “to create the underdeveloped country Mexico has become.” Applying economic theory and measuring, Coatsworth in essence proves with numbers a case argued more elegantly in straight prose early in this century: that the application of a modern transportation network to a staple producing economy will do little more than extend and intensify the production system so as to increase the staple output.

scholarly journals Spontaneous Gac Mutants of Pseudomonas Biological Control Strains: Cheaters or Mutualists?

2011 ◽  
Vol 77 (20) ◽  
pp. 7227-7235 ◽  
Author(s):  
William W. Driscoll ◽  
John W. Pepper ◽  
Leland S. Pierson ◽  
Elizabeth A. Pierson
Keyword(s):  
Alternative Hypothesis ◽  
Natural Populations ◽  
Regulatory System ◽  
Wild Type ◽  
Content Type ◽  
The Public ◽  
Extracellular Metabolites ◽  
Mutualistic Interaction ◽  
Alternative Hypotheses

ABSTRACTBacteria rely on a range of extracellular metabolites to suppress competitors, gain access to resources, and exploit plant or animal hosts. The GacS/GacA two-component regulatory system positively controls the expression of many of these beneficial external products in pseudomonad bacteria. Natural populations often contain variants with defective Gac systems that do not produce most external products. These mutants benefit from a decreased metabolic load but do not appear to displace the wild type in nature. How could natural selection maintain the wild type in the presence of a mutant with enhanced growth? One hypothesis is that Gac mutants are “cheaters” that do not contribute to the public good, favored within groups but selected against between groups, as groups containing more mutants lose access to ecologically important external products. An alternative hypothesis is that Gac mutants have a mutualistic interaction with the wild type, so that each variant benefits by the presence of the other. In the biocontrol bacteriumPseudomonas chlororaphisstrain 30-84, Gac mutants do not produce phenazines, which suppress competitor growth and are critical for biofilm formation. Here, we test the predictions of these alternative hypotheses by quantifying interactions between the wild type and the phenazine- and biofilm-deficient Gac mutant within growing biofilms. We find evidence that the wild type and Gac mutants interact mutualistically in the biofilm context, whereas a phenazine-defective structural mutant does not. Our results suggest that the persistence of alternative Gac phenotypes may be due to the stabilizing role of local mutualistic interactions.

A Joyful Economist. Scitovsky's Memoirs

2012 ◽  
pp. 57-73
Author(s):  
Marina Bianchi
Keyword(s):  
Economic Theory ◽  
Original Thinking ◽  
Personal Philosophy

Few economists choose to write memoirs, and of those who do most adopt the "logic of my contributionsŁ approach. Tibor Scitovsky, Hungarian-born theorist who spent most of his career at Stanford and Berkeley, instead left us unpublished recollections, many of his childhood, others bearing on his personal philosophy (and shift therein) - of teaching, of the role of economic theory, of its imperfections. By their nature these Memoirs give us glimpses into his nimble, original thinking, without being weighed down with considerations of priority, answering critics, and so on. The paper tries to capture this spirit, frequently in Scitovsky's own words.

The Role of Economic Theory

2002 ◽  
pp. 3-16
Author(s):  
Stephen J. Bailey
Keyword(s):  
Economic Theory
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