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Marginal Cost (marginal + cost)
Kinds of Marginal Cost Selected AbstractsSTRUCTURE REGULATION, PRICE STRUCTURE, CROSS-SUBSIDIZATION AND MARGINAL COST OF PUBLIC FUNDS,THE MANCHESTER SCHOOL, Issue 6 2009MING CHUNG CHANG In this paper we study the social desirability of the structure regulation which transforms a single multi-product monopoly into an oligopoly where the industry produces differentiated complementary goods. In particular, we pay special attention to the cross-subsidization which will be eliminated by the structure regulation. It is established that if horizontal externalities between the goods are not too strong, then the monopoly has a socially optimal price structure. In contrast, the oligopoly always distorts the price structure. We also demonstrate that the monopoly will cross-subsidize a product if and only if this product has a relatively low absolute advantage. [source] ACCESS TO ESSENTIAL MEDICINES: A HOBBESIAN SOCIAL CONTRACT APPROACHDEVELOPING WORLD BIOETHICS, Issue 2 2005RICHARD E. ASHCROFT ABSTRACT Medicines that are vital for the saving and preserving of life in conditions of public health emergency or endemic serious disease are known as essential medicines. In many developing world settings such medicines may be unavailable, or unaffordably expensive for the majority of those in need of them. Furthermore, for many serious diseases (such as HIV/AIDS and tuberculosis) these essential medicines are protected by patents that permit the patent-holder to operate a monopoly on their manufacture and supply, and to price these medicines well above marginal cost. Recent international legal doctrine has placed great stress on the need to globalise intellectual property rights protections, and on the rights of intellectual property rights holders to have their property rights enforced. Although international intellectual property rights law does permit compulsory licensing of protected inventions in the interests of public health, the use of this right by sovereign states has proved highly controversial. In this paper I give an argument in support of states' sovereign right to expropriate private intellectual property in conditions of public health emergency. This argument turns on a social contract argument for the legitimacy of states. The argument shows, further, that under some circumstances states are not merely permitted compulsory to license inventions, but are actually obliged to do so, on pain of failure of their legitimacy as sovereign states. The argument draws freely on a loose interpretation of Thomas Hobbes's arguments in his Leviathan, and on an analogy between his state of War and the situation of public health disasters. [source] Technology and Cartel Stability under Vertical DifferentiationGERMAN ECONOMIC REVIEW, Issue 4 2000Luca Lambertini The interplay between R&D activity and cartel stability is investigated in a vertical differentiation framework with convex costs. The behaviour of firms' critical discount factors as the curvature of the cost function varies is investigated, considering either price- or quantity-setting behaviour. In order to stabilize collusion, firms are better off playing à la Cournot and supplying the non-cooperative qualities. There emerges a tradeoff between the reduction of the convexity of the cost function and the associated increase in marginal cost. The decision to carry out joint or independent ventures in research is also investigated, showing that such a decision is non-monotone in intertemporal discounting. Policy measures are then briefly discussed. [source] Monopoly and Oligopoly Provision of Addictive GoodsINTERNATIONAL ECONOMIC REVIEW, Issue 1 2001Robert Driskill This article investigates monopoly and oligopoly provision of an addictive good. Consumer preferences are modeled as in Becker and Murphy (1988). Addictive goods have characteristics that create interesting strategic issues when suppliers are noncompetitive. We characterize the perfect Markov equilibrium of a market with noncompetitive supply of an addictive good and compare it with the efficient solution. Depending on particular parameter values, we find a wide variety of possible steady-state outcomes, including ones with output above the efficient level and price below marginal cost. We also find that market power can be disadvantageous. [source] Process and product innovation: A differential game approach to product life cycleINTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 2 2010Luca Lambertini C73; D43; D92; O31 We investigate the timing of adoption of product and process innovation using a differential game where firms may invest in both activities. We consider horizontal product innovation that reduces product substitutability, and process innovation that reduces marginal cost. First, we demonstrate that the incentive for cost-reducing investment is relatively higher than the incentive to increase product differentiation. Second, depending on initial conditions: (i) firms activate both types of investment from the very outset to the steady state; (ii) firms initially invest in only one R&D activity and then reach the steady state either carrying out only this activity or carrying out both; or (iii) firms do not invest at all in either type of innovation. Comparing R&D investments under Cournot and Bertrand behavior shows that quantity competition entails lower R&D incentives than price competition in both directions. [source] Role of Endogenous Vintage Specific Depreciation in the Optimal Behavior of FirmsINTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 3 2008Cagri Saglam D92; O33; E22; C61 This paper studies the firms' capital accumulation process in a vintage capital model with embodied technological change. We take into account that depreciation is endogenous and in particular associated with vintage specific maintenance expenditure. We prove that maintenance is a local substitute for investment as soon as the marginal cost of maintenance is strictly increasing. We show that maintenance and investment in new capital goods appear as complements with respect to the changes in productivity, cost of maintenance, fixed cost of operation, efficiency of maintenance services and appear as substitutes with respect to the price of new machines. Allowing for investment in old vintages, we determine that investment in old machines appears as a substitute of both investments in new machines and maintenance services. We end up by analyzing the effects of technological progress on optimal plans and prove that a negative anticipation effect can occur even without any market imperfections. [source] Energy conservation conflicts in district heating systemsINTERNATIONAL JOURNAL OF ENERGY RESEARCH, Issue 1 2003Björn Rolfsman Abstract In Sweden, district heating of buildings is in common use. This paper deals with the district heating tariff. Many economists argue that the tariff should be based on short-range marginal costs, but in practice this never occurs. Traditionally instead, the prices are set so they are lower than the alternatives. A case study is presented dealing with a residential building in Navestad, Norrköping. For this building, the life-cycle cost with extra wall insulation and the introduction of a heat pump has been calculated. A comparison of two perspectives, the present tariff and a tariff-based short-range marginal cost, is done. It is shown that there is a conflict between the two perspectives. For the tariff based on short-range marginal cost, neither extra insulation nor an introduction of a heat pump is profitable. However, with the present tariff, a bivalent system with a heat pump and district heating is profitable. Copyright © 2002 John Wiley & Sons, Ltd. [source] Price Dispersion and Consumer Reservation PricesJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 1 2005Simon P. Anderson We describe firm pricing when consumers follow simple reservation price rules. In stark contrast to other models in the literature, this approach yields price dispersion in pure strategies even when firms have the same marginal costs. At the equilibrium, lower price firms earn higher profits. The range of price dispersion increases with the number of firms: the highest price is the monopoly price, while the lowest price tends to marginal cost. The average transaction price remains substantially above marginal cost even with many firms. The equilibrium pricing pattern is the same when prices are chosen sequentially. [source] Spatial economics of biological control: investing in new releases of insects for earlier limitation of Paterson's curse in AustraliaAGRICULTURAL ECONOMICS, Issue 3 2002T.L. Nordblom Abstract Paterson's curse and related weeds (Echium spp.) were introduced as garden flowers before 1850 and have spread to over 30 million ha in southern Australia. Four hundred successful releases of crown weevil (M. lawatus) populations specifically targeting Echium spp. were made in the 1993,2000 period. Based on the timing, location and performance of these past releases of beneficial insects, spatially and temporally specific trajectories of biocontrol have been simulated. Insect populations established by the past releases are expected to cover expanding areas at densities sufficient to limit host Echium infestations only over the next 25-50 years. The present analysis tackles the questions of where and how many additional releases are economically justified to speed up this process. We identify 31 districts in which diminishing niches for further insect releases are projected over time, according to the locations of damaging weed infestations and the timing, location and numbers of past insect releases. Benefits of biocontrol are expressed in terms of the value of recovered pasture productivity, keyed to estimates of loss and to historical district livestock inventories converted to dry sheep equivalent (DSE) feed availability levels to which prices are applied. Expected marginal contributions of increments of new releases were simulated for each of the 31 districts, subject to the spacehime limitations of each niche. Our explicit accounting for the spatial and temporal dimensions has made possible the economically optimd targeting of new biocontrol releases. For example, at $12/DSE and a marginal cost of $2000 per release, with a discount rate of l0%, we find there is a case for a program of over 400 new releases targeted to 17 districts, with as few as five releases to each of several and as many as 70 releases in one district. [source] Estimating the New Keynesian Phillips Curve: A Vertical Production Chain ApproachJOURNAL OF MONEY, CREDIT AND BANKING, Issue 4 2008ADAM HALE SHAPIRO New Keynesian Phillips Curve; generalized method of moments; vertical production chain; inflation It has become customary to estimate the New Keynesian Phillips Curve (NKPC) with generalized method of moments using a large instrument set that includes lags of variables that are ad hoc to the firm's price-decision problem. Researchers have also conventionally used real unit labor cost (RULC) as the proxy for real marginal cost even though it is difficult to support its significance. This paper introduces a new proxy for the real marginal cost term as well as a new instrument set, both of which are based on the micro foundations of the vertical chain of production. I find that the new proxy, based on input prices as opposed to wages, provides a more robust and significant fit to the model. Instruments that are based on the vertical chain of production appear to be both more valid and relevant toward the model. [source] Using private demand studies to calculate socially optimal vaccine subsidies in developing countriesJOURNAL OF POLICY ANALYSIS AND MANAGEMENT, Issue 1 2009Joseph Cook Although it is well known that vaccines against many infectious diseases confer positive economic externalities via indirect protection, analysts have typically ignored possible herd protection effects in policy analyses of vaccination programs. Despite a growing literature on the economic theory of vaccine externalities and several innovative mathematical modeling approaches, there have been almost no empirical applications. The first objective of the paper is to develop a transparent, accessible economic framework for assessing the private and social economic benefits of vaccination. We also describe how stated preference studies (for example, contingent valuation and choice modeling) can be useful sources of economic data for this analytic framework. We demonstrate socially optimal policies using a graphical approach, starting with a standard textbook depiction of Pigouvian subsidies applied to herd protection from vaccination programs. We also describe nonstandard depictions that highlight some counterintuitive implications of herd protection that we feel are not commonly understood in the applied policy literature. We illustrate the approach using economic and epidemiological data from two neighborhoods in Kolkata, India. We use recently published epidemiological data on the indirect effects of cholera vaccination in Matlab, Bangladesh (Ali et al., 2005) for fitting a simple mathematical model of how protection changes with vaccine coverage. We use new data on costs and private demand for cholera vaccines in Kolkata, India, and approximate the optimal Pigouvian subsidy. We find that if the optimal subsidy is unknown, selling vaccines at full marginal cost may, under some circumstances, be a preferable second-best option to providing them for free. © 2009 by the Association for Public Policy Analysis and Management. [source] Regulating a Monopolist with Unknown Demand: Costly Public Funds and the Value of Private InformationJOURNAL OF PUBLIC ECONOMIC THEORY, Issue 5 2004Iñaki 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] Regulation and Coordination of International Environmental Externalities with Incomplete Information and Costly Public FundsJOURNAL OF PUBLIC ECONOMIC THEORY, Issue 3 2000Faysal Mansouri In this article, we study cross-border externalities in a game played by two principal-agent pairs with adverse selection. Each firm/agent is located in one country and generates pollution by producing complementary or substitute goods, sold on a common market. A fraction of pollution is transferred from one country to another. Each regulator/principal is imperfectly informed about the marginal cost of his domestic firm and accordingly uses secret incentive contracts with costly public funds. We show the necessity of cooperation between competing regulators to effectively internalize all the damages caused to the environment, while reaching the first best. If the level of uncertainty is sufficiently low, we obtain an infinity of noncooperative Bayesian differentiable equilibria, which may necessitate competing regulators to coordinate on an equilibrium. Such coordination constitutes an incentive for competing regulators to cooperate. Our major result states that under some circumstances asymmetric information relaxes the transborder externality problem. Indeed, we show that, when there is a major transfer of pollution and firms' marginal costs are sufficiently high, competing regulators are better off under uncertainty. Therefore, asymmetry of information can have the very consequence of generating regulation that is too strict from the domestic viewpoint but that improves social efficiency when the benefits to both countries are taken into account. [source] Innovation and the opportunity cost of monopolyMANAGERIAL AND DECISION ECONOMICS, Issue 8 2008Michael Reksulak Innovation enables monopolists to lower their costs, expand their outputs, and reduce their prices. It is conventional to conclude that social welfare unambiguously increases as a result. Assuming linear demand and marginal cost, this paper shows, however, that innovation raises the opportunity cost of monopoly: as a firm enjoying market power becomes more efficient, greater amounts of surplus are sacrificed by consumers because of the progressive monopolist's failure to produce the new, larger competitive output. Innovation, in other words, increases the social value of competition by raising the deadweight cost of monopoly. Copyright © 2008 John Wiley & Sons, Ltd. [source] Fixed cost, marginal cost, and the decision to buy or makeMANAGERIAL AND DECISION ECONOMICS, Issue 3 2004Charles E. Hegji The paper builds a formal model of the costs and benefits of producing intermediate goods internally as compared to buying partially produced inputs on the open market. The model centers on the link between the purchase of assets specific to a production process and the mean and variance of profits from the purchase. The central point of the paper is that even though purchases of assets specific to a production process can have an ambiguous impact on profits of the decision to make, the purchase of such assets has a tendency to reduce the variability of profits. This trade-off is at the heart of decision to buy or make. Copyright © 2004 John Wiley & Sons, Ltd. [source] The product differentiation hypothesis for corporate trade creditMANAGERIAL AND DECISION ECONOMICS, Issue 6-7 2003George W. Blazenko The product differentiation hypothesis for trade credit says that business managers use trade credit like advertising to differentiate their products. Prior studies of this hypothesis conclude that higher profit margins induce firms to increase trade credit and vice versa. We better represent the relation between the cost of bad debts and the price of the product offered on credit. When prices are higher, firms suffer greater losses from non-payment. Our model shows that, contrary to early versions of the product differentiation hypothesis, when managers adjust trade credit and profit margins for a perturbation in marginal cost, optimal profit margin and trade credit may move in opposite directions. A manager maintains revenue for price elastic demand by moderating the price increase, which decreases profit margin. At the same time, the manager also increases trade credit, which serves to maintain revenue by encouraging product demand. We report evidence of a negative relation between corporate receivables and profit margin. Copyright © 2003 John Wiley & Sons, Ltd. [source] The Production Responses of the Competitive Firm to Three Conventional Distributional Shifts: a Unified PerspectiveMETROECONOMICA, Issue 2 2000Wayne Simpson This paper presents a unified perspective on the production responses of the competitive firm to three conventional distributional shifts: (i) a rightward shift of the distribution, (ii) a Rothschild,Stiglitz increase in risk, and (iii) a Menezes et al. increase in downside risk. In particular, assuming that the von Neumann,Morgenstern utility is increasing and concave, and assuming its higher-order derivatives are uniformly signed, we demonstrate that the production responses are unambiguous in the case of price less than or equal to marginal cost. In the alternative case of price greater than marginal cost, we then demonstrate that the production responses can be signed unambiguously by reference to sufficient conditions motivated by absolute risk aversion and by absolute prudence. [source] Supply contracts in manufacturer-retailer interactions with manufacturer-quality and retailer effort-induced demandNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 3 2008Haresh Gurnani Abstract We consider a decentralized distribution channel where demand depends on the manufacturer-chosen quality of the product and the selling effort chosen by the retailer. The cost of selling effort is private information for the retailer. We consider three different types of supply contracts in this article: price-only contract where the manufacturer sets a wholesale price; fixed-fee contract where manufacturer sells at marginal cost but charges a fixed (transfer) fee; and, general franchise contract where manufacturer sets a wholesale price and charges a fixed fee as well. The fixed-fee and general franchise contracts are referred to as two-part tariff contracts. For each contract type, we study different contract forms including individual, menu, and pooling contracts. In the analysis of the different types and forms of contracts, we show that the price only contract is dominated by the general franchise menu contract. However, the manufacturer may prefer to offer the fixed-fee individual contract as compared to the general franchise contract when the retailer's reservation utility and degree of information asymmetry in costs are high. © 2008 Wiley Periodicals, Inc. Naval Research Logistics, 2008 [source] The Economics of an Efficient Reliance on Biomass, Carbon Capture and Carbon Sequestration in a Kyoto-style Emissions Control EnvironmentOPEC ENERGY REVIEW, Issue 3 2001Gary W. Yohe This note employs the economics paradigm to sort through the complications of relying simultaneously on biomass fuels, carbon capture with active sequestration and passive carbon sequestration to meet Kyoto-style carbon emission limits. It does so by exploiting the structure of a tax cum repurchase scheme for carbon. Under such a scheme, the carbon content of fossil fuel should be taxed at the point of purchase at a price that matches the shadow price of the carbon emission limit, but carbon embedded in biomass fuel should go un-taxed. The price of biomass fuel would, though, have to reflect the marginal cost of any externalities it might cause and the opportunity cost of its land-use requirements. Captured carbon could be repurchased at a price equal to the shadow price of carbon, net of the cost of active sequestration, itself the sum of private and social marginal costs. Finally, the price of the passive sequestration of carbon should equal the shadow price of carbon, net of the opportunity cost of setting those resources aside. Since a marketable permit system would support direct estimates of the requisite shadow price of carbon, such a system would also provide direct information about base prices for the tax cum repurchase scheme. To support long-term investment in biomass supply and sequestration, though, changes over time in emission limits must be accomplished in a smooth and predictable manner. [source] The Hybrid Permit Cum Price Ceiling Policy Proposal: Intuition From The Prices Versus Quantities LiteratureOPEC ENERGY REVIEW, Issue 4 2000Gary W. Yohe The social value of choosing a marketable permit cum price ceiling mechanism over an unencumbered marketable permit scheme to limit the emission of greenhouse gases is explored. Insight from the prices versus quantities literature instructs that this relative valuation weighs the benefit of increased variability in emissions as economic conditions warrant against an increase in the expected cost of climate change. The value of the hybrid scheme is high and carries a low price ceiling when, ceteris paribus, the marginal benefit of emissions reduction is not very sensitive to changes in the regulatory environment, when the marginal cost of reducing emissions is sensitive to that environment, when the variance in marginal cost is high and/or when the distortion created by the initial allocation of permits is large. The value is correspondingly low and the ceiling high when the opposite conditions hold. [source] Price and Variety in the Spokes Model,THE ECONOMIC JOURNAL, Issue 522 2007Yongmin Chen The spokes model of nonlocalised spatial competition provides a new analytical tool for differentiated oligopoly and a representation of spatial monopolistic competition. An increase in the number of firms leads to lower equilibrium prices when consumers have relatively high product valuations, but, surprisingly, to higher equilibrium prices for intermediate consumer valuations. New entry alters consumer and social welfare through price, market expansion, and matching effects. With free entry, the market may provide too many or too few varieties from a social welfare perspective, and the equilibrium price remains above marginal cost even when the number of firms is arbitrarily large. [source] Volatility and commodity price dynamicsTHE JOURNAL OF FUTURES MARKETS, Issue 11 2004Robert S. Pindyck Commodity prices are volatile, and volatility itself varies over time. Changes in volatility can affect market variables by directly affecting the marginal value of storage, and by affecting a component of the total marginal cost of production, the opportunity cost of producing the commodity now rather than waiting for more price information. I examine the role of volatility in short-run commodity market dynamics and the determinants of volatility itself. I develop a structural model of inventories, spot, and futures prices that explicitly accounts for volatility, and estimate it using daily and weekly data for the petroleum complex: crude oil, heating oil, and gasoline. © 2004 Wiley Periodicals, Inc. Jrl Fut Mark 24:1029,1047, 2004 [source] BIASES IN STATIC OLIGOPOLY MODELS?THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 4 2006EVIDENCE FROM THE CALIFORNIA ELECTRICITY MARKET Estimating market power is often complicated by a lack of reliable marginal cost data. A number of empirical studies identify industry competition and marginal cost levels by estimating the firms' first order condition within a conjectural variations framework. Few studies, however, have analyzed the accuracy of this technique. In this paper, we use direct measures of marginal cost for the California electricity market to measure the extent to which estimated mark-ups and marginal costs are biased. Our results suggest that the technique poorly estimates mark-ups and the sensitivity of marginal cost to cost shifters. [source] EXCESS-ENTRY THEOREM: THE IMPLICATIONS OF LICENSING*THE MANCHESTER SCHOOL, Issue 6 2008ARIJIT MUKHERJEE We show that, in the presence of technology licensing, entry in an industry with Cournot competition may lead to a socially insufficient, number of firms. Insufficient entry occurs if the own marginal cost of the entrant is sufficiently high. Hence, the justification for anticompetitive entry regulation due to the standard excess-entry result may not be justified in the presence of licensing. However, if the own marginal cost of the entrant is very low, licensing may create excessive entry for those entry costs where entry does not occur without licensing; thus licensing reduces social welfare though it increases competition. [source] Screening when some agents are nonstrategic: does a monopoly need to exclude?THE RAND JOURNAL OF ECONOMICS, Issue 4 2006Sergei Severinov We characterize the optimal screening mechanism for a monopolist facing consumers with privately known demands, some of whom have limited abilities to misrepresent their preferences. We show that consumers with better abilities to misrepresent information benefit from the presence of consumers who lack such abilities. Whenever the fraction of the latter group is positive, there is no exclusion: the firm supplies a positive quantity of the good to all consumers whose valuations exceed marginal cost of production. Our analysis is motivated by the evidence indicating that some individuals have limited ability to misrepresent themselves and imitate others. [source] Predation and its rate of return: the sugar industry, 1887,1914THE RAND JOURNAL OF ECONOMICS, Issue 1 2006David Genesove We show that the price wars following two major entry episodes were predatory. Our proof is twofold: by direct comparison of price to marginal cost, and by construction of a lower bound to predicted competitive price-cost margins that we show to exceed observed margins. Predation occurred only when its relative cost to the dominant firm, the American Sugar Refining Company (ASRC), was small. Its most clear effect was to lower the acquisition price of entrants and small incumbents. It may also have deterred future capacity additions and raised ASRC's share of industry profits. Predation operated by strengthening ASRC's reputation as a willing predator. [source] WELFARE-MAXIMISING PRICING IN A MACROECONOMIC MODEL WITH IMPERFECT COMPETITION AND CONSUMPTION EXTERNALITIESAUSTRALIAN ECONOMIC PAPERS, Issue 3 2010CHI-TING CHIN This paper develops a simple macroeconomic model with imperfect competition and consumption externalities, and uses it to examine whether the marginal cost pricing rule in the partial equilibrium framework can apply to the general equilibrium framework. It is shown that, for welfare to be maximised, average revenue should be set equal to marginal cost if consumption externalities are either absent or positive. However, for welfare to be maximised, average revenue should be set higher than marginal cost in the presence of negative consumption externalities. [source] GEOGRAPHICAL SPACE AND EFFECTIVE DEMAND UNDER STAGNATIONAUSTRALIAN ECONOMIC PAPERS, Issue 4 2006WATARU JOHDO This paper investigates the adjustment mechanism between geographical space and effective demand under stagnation by constructing a spatial model with stagnation included. The model takes the idea of stagnation in Ono (2001) and combines it with the spatial model of Perera-Tallo (2003). The spatial model features local monopolists that import intermediate goods from other monopolists at a cost that can be decreased through investment. Using the integrated model, we reach the following conclusion: the wider the geographical space, the lower the effective demand under stagnation. This mechanism is explained as follows. Under stagnation, where demand has reached an upper bound, a decrease in the marginal cost of reaching distant intermediate suppliers reduces employment. The reason is ,love of variety' in production: for given final output, more variety of available intermediate inputs crowds out per-variety demand of intermediates and thus employment. Decreases in employment then lead to a decrease in the rate of time preference through a rise in the deflation rate, and thereby decrease the desire for consumption, consequently cutting effective demand. [source] Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: do too many cooks spoil the goulash?CORPORATE GOVERNANCE, Issue 2 2005John S. Earle We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the size of the largest block increases profitability and efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves "too many cooks". [source] THE FISCAL CHALLENGE OF COMPETITIVE MARKETSECONOMIC AFFAIRS, Issue 1 2005Fred Harrison Competition maximises consumer satisfaction but creates a financial problem for enterprises. When prices are competed down to just cover marginal costs, part of the value added by the enterprise is externalised. Government has not been efficient at recycling that value back into the economy, which is why infrastructure is severely underfunded. [source] | ||||||||||||||||||||||||||||||||||||||||