Applications of Price Gap and Adjustment Weights in Analyzing a Natural Monopoly with a Linear Decreasing Marginal Cost Function

2014 ◽  
Author(s):  
Naresh C. Mallick
Keyword(s):  
Cost Function ◽  
Marginal Cost ◽  
Natural Monopoly

An Analysis on the Scale Economies and Scope Economies after the Reorganization of China Unicom

2011 ◽  
Vol 474-476 ◽  
pp. 355-360
Author(s):  
Jian Na Zhao ◽  
Xin Qiao Zhang
Keyword(s):  
Cost Function ◽  
Scale Economies ◽  
Natural Monopoly ◽  
Scope Economies ◽  
Basic Character ◽  
Telecom Industry ◽  
China Unicom

Telecom industry, characterized by techno- economic, presents some features of scale economies and scope economies on the basic character of its natural monopoly. The question is whether it continues to exist after the reorganization of the Telecom industry. This paper mainly analyzes the features of scale economies and scope economies after the reorganization of China Unicom on the application of transcendental logarithmic cost function to show the existence of scale economies and scope economies after the reorganization.

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.

Optimal Age and Block Replacement for a General Maintenance Model

1992 ◽  
Vol 6 (1) ◽  
pp. 81-98 ◽  
Author(s):  
C. S. Chen ◽  
Thomas H. Savits
Keyword(s):  
Cost Function ◽  
Marginal Cost ◽  
Cost Structure ◽  
Fixed Amount ◽  
New Model ◽  
Repair Costs ◽  
Maintenance Model

We continue the study of our general cost structure for a maintained system. Here we focus on the optimization questions for an age or block policy. The notion of a marginal cost function is rigorously formulated and its utility investigated. Various applications are considered, including a new model in which minimal repairs are performed as long as the total accumulated repair costs do not exceed a fixed amount.

Technology and Cartel Stability under Vertical Differentiation

2000 ◽  
Vol 1 (4) ◽  
pp. 421-442 ◽  
Author(s):  
Luca Lambertini
Keyword(s):  
Cost Function ◽  
Marginal Cost ◽  
Vertical Differentiation ◽  
Cartel Stability ◽  
Discount Factors ◽  
Intertemporal Discounting ◽  
Policy Measures ◽  
Convex Costs ◽  
The Cost

Abstract 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.

Marginal Cost Analysis of Some Basic Ordering Policies for a Spare Unit and Extensions

1998 ◽  
Vol 05 (03) ◽  
pp. 293-312 ◽  
Author(s):  
Attila Csenki
Keyword(s):  
Cost Analysis ◽  
Cost Function ◽  
Marginal Cost ◽  
Rate Function ◽  
Discounted Cost ◽  
Cost Rate ◽  
Cost Approach ◽  
Look Ahead ◽  
Ordering Policies

The marginal cost approach has proved a useful economics-based alternative to the well known classical analysis of replacement models. In this paper, the marginal cost analysis' workings are explored for some basic ordering models for systems with a single spare unit. As with replacement models, the fundamental quantity of interest is the marginal cost function. While the basic pattern of analysis broadly corresponds to that for replacement models, the usual micro-type reasoning inherent in marginal cost analysis now has to be supplemented by some look-ahead considerations and a more detailed analysis. Moreover, the optimality equation derived here for ordering models is an extension of that for replacement models. Two kinds of objective functions are considered here: the long term expected cost rate function and the expected total discounted cost function. Several ordering policies are reviewed by way of the marginal cost approach, which, it is argued, is a viable and from the decision maker's perspective attractive tool of analysis also in the ordering context.

scholarly journals MODEL PENENTUAN TARIF MENGGUNAKAN MINIMISASI BIAYA DAN PERMINTAAN INPUT UNTUK PERUSAHAAN MONOPOLI

2020 ◽  
Vol 1 (3) ◽  
Author(s):  
Fitra Waty
Keyword(s):  
Drinking Water ◽  
Public Goods ◽  
Indirect Cost ◽  
Cost Function ◽  
Production Function ◽  
Large Scale ◽  
Natural Monopoly ◽  
The Public ◽  
The Government ◽  
Huge Investment

Provision of some public goods, such as drinking water, electricity, gas, telephone, in many countries is generally done by the government. This is due to the firm is a natural monopoly, meaning that these companies require a huge investment, so that the level of efficiency can be achieved when the large scale of production. The problem is what price should be charged to the public? This study aimed to determine the price of a good in theory. The method used is minimization cost of production (through indirect cost function) with the constraints of the production function.

Bertrand Competition in Markets with Fixed Costs

2010 ◽  
Vol 10 (1) ◽  
Author(s):  
Alejandro Saporiti ◽  
Germán Coloma
Keyword(s):  
Cost Function ◽  
Price Competition ◽  
Pure Strategy ◽  
Sufficient Conditions ◽  
Natural Monopoly ◽  
Bertrand Competition ◽  
Fixed Costs ◽  
Bertrand Equilibrium ◽  
Pure Strategies ◽  
The Cost

This paper provides necessary and sufficient conditions for the existence of a pure strategy Bertrand equilibrium in a model of price competition with fixed costs. It unveils an interesting and unexplored relationship between Bertrand competition and natural monopoly. That relationship points out that the non-subadditivity of the cost function at the output level corresponding to the oligopoly break-even price, denoted by D(pL(n)), is sufficient to guarantee that the market sustains a (not necessarily symmetric) Bertrand equilibrium in pure strategies with two or more firms supplying at least D(pL(n)). Conversely, the existence of a pure strategy equilibrium ensures that the cost function is not subadditive at every output greater than or equal to D(pL(n)).

Natural Monopoly Regulation

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