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Constant Marginal Costs (constant + marginal_cost)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting75%

Selected Abstracts

Regulating a Monopolist with Unknown Demand: Costly Public Funds and the Value of Private Information

JOURNAL OF PUBLIC ECONOMIC THEORY, Issue 5 2004
Iņaki Aguirre
In this paper, we analyze the optimal regulation policy when the regulated firm has better information concerning the market demand than the regulator. We show that introducing a cost on public funds into the Planner's objective function does not lead to qualitative results similar to those obtained by introducing distributional considerations. In particular we show that under constant marginal cost the full information policy is not implementable and that the optimal regulatory policy results in informational rents. The social value of private information and the firm's informational rents are both increasing functions of the cost of the public funds. [source]

Spatial Pricing Policies Reconsidered: Monopoly Performance and Location

JOURNAL OF REGIONAL SCIENCE, Issue 4 2001
Lin-Ti Tan
This paper reexamines the welfare implications of three pricing regimes (mill, uniform, and discriminatory) for a monopoly. Assuming linear demand and constant marginal costs, I show that with the introduction of endogenous location choice, uniform delivered pricing may provide the highest social welfare when demands in different markets are sufficiently heterogeneous; whereas discriminatory pricing always dominates uniform pricing when demands in different markets are similar. [source]

A Generalized Oligopoly Model

METROECONOMICA, Issue 1 2002
Richard Watt
This paper generalizes and unifies the traditional quantity competition oligopoly models of Cournot and Stackelberg. Traditional oligopoly models predict that, under constant marginal costs, there will only be one market share (Cournot) or a single firm with a large market share and all others with the same market share (Stackelberg). Without altering the basic assumption set, in particular the assumptions of common marginal cost functions, perfect information and linear demand, the paper presents a general model that may be useful to explain many real-life situations of oligopoly competition, where many different market shares may coexist. Finally, it is shown that certain existing social welfare results are robust to the generalization. [source]

MERGERS UNDER UNCERTAINTY: THE EFFECTS OF DEBT FINANCING,

THE MANCHESTER SCHOOL, Issue 5 2007
M. PILAR SOCORRO
In this paper, we consider a Cournot oligopoly with demand uncertainty, fixed costs and constant marginal costs. The demand uncertainty makes some mergers that would be unprofitable in a certain environment profitable in this model. However, socially advantageous mergers may be still unprofitable for the colluding firms, so public intervention may be needed. One possibility consists in subsidizing such mergers. However, the combination of limited liability debt financing and an appropriate antitrust policy leads to higher social welfare than subsidies. The reason is that, given the limited liability effect, merging parties compete more aggressively, so the reduction in market quantity is mitigated. [source]