The past decade has seen a substantial amount of scholarly activity in the US devoted to the economics of pricing in regulated (or public) enterprises subject to increasing returns to scale. More recently, this interest in public enterprise pricing has been actively shared by economists and policymakers in Europe, especially West Germany and Great Britain. While much of this work has been somewhat technical, it is aimed directly at the pricing issues of greatest concern to managers and regulators of public enterprises. In this paper, some of these pricing policy concerns are explored in a non-technical format, drawing upon the ‘new literature’ where appropriate. Our purpose here is not to report new research, but rather to consider those broad pricing issues that recur across different countries, different industries and different times, and what light economics can shed on such issues.
KeywordsEurope Income Assure Trench Defend
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Notes and References
- 1.R. C. Levin, ‘Railroad Rates, Profitability, and Welfare Under Deregulation’, Bell J. Econ., Spring 1981.Google Scholar
- 2.Robert Willig and Elizabeth Bailey, ‘Income Distributional Concerns in Regulatory Policy-Making’, in G. Fromm (ed.), Studies in Regulation (Cambridge, Mass.: MIT Press, 1981).Google Scholar
- 4.For a precise definition and characterization of subsidy-free prices, see G. R. Faulhaber, ‘Cross-Subsidization in Public Enterprise Pricing’, American Economic Review, Dec. 1975.Google Scholar
- 5.See W. Baumol and D. Bradford, ‘Quasi-Optimal Departures from Marginal Cost Pricing’, American Economic Review, Sept. 1970.Google Scholar
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