A regulatory bargain for diversified enterprises
Ronald Ray Braeutigam, Northwestern University (Evanston, Ill.). Dept. of Economics, Northwestern University (Evanston, Ill.). Transportation Center
Transportation Center, Northwestern University, 1992 - Law - 28 pages
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allows the firm asymmetric information comparative statics competitive and noncompetitive competitive markets competitive noncore market consumer and producer consumer surplus core markets cost minimizing fashion customers in noncompetitive demand schedules diseconomies of scope diversification into competitive diversification is profitable diversified firms economically efficient economies of scope envelope theorem exogenous factor price factors of production firm can break firm cannot break firm to earn firm to produce firm under NBS firm under price form of regulation incentives increase total welfare induce the firm inefficient marginal cost markets served natural monopoly NBS firm NBS regulation noncompetitive markets noncompetitive outputs noncompetitive services Partially Regulated Second pdyd positive profit possible regulatory objective price cap formula price cap regulation prices are set producer surplus Property pure price cap rate of return regulated firm Regulated Second Best regulatory constraint return regulation sum of consumer surplus and welfare tighter bargain total expenditures total surplus