Public Enterprise Economics - 2nd Edition - ISBN: 9780444885074, 9781483193236

Public Enterprise Economics, Volume 23

2nd Edition

Theory and Application

Editors: C. J. Bliss M. D. Intriligator
Authors: Dieter Bös
eBook ISBN: 9781483193236
Imprint: North Holland
Published Date: 1st January 1989
Page Count: 480
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Table of Contents


Technical Note

Chapter 1 Introduction

1.1 Normative and Positive Theory

1.2 The Public Enterprise

1.3 Nationalization of Enterprise

1.4 Privatization: A Swelling Tide?

1.5 Socialization of Commodities

1.6 Optimal Qualities

1.7 Optimal Price Schedules

Part One The Basic Model

Chapter 2 Essential Parts of Public Sector Pricing Models

2.1 Objectives I: Normative Theory

2.2 Objectives II: Positive Theory

2.3 Constraints I: Markets

2.4 Constraints II: Production

2.5 Constraints III: Finance

Chapter 3 Normative Optimum Theory

3.1 The Actors and their Instruments

3.2 Solving the Model

3.3 The Conditions for Optimal Prices and Quantities

3.4 Compensating for Income Effects

3.5 The Conditions for Optimal Quality

Chapter 4 Positive Optimum Theory

Chapter 5 Normative Piecemeal Theory

5.1 On the Difference Between Optimum and Piecemeal Policies

5.2 Welfare Improvements with Non-Tight Constraints

5.3 Welfare Improvements with Tight Technology Constraint

5.4 On Welfare-Improving Increases of Public Inefficiency

5.5 Piecemeal Policy Recommendations: General Rules for Some Special Cases

Chapter 6 Positive Piecemeal Theory

6.1 Improvements with Tight and Non-Tight Constraints

6.2 The Trade-Off Between Efficiency and Market Equilibrium

Part Two Normative Theory: Public Pricing Policies for Welfare Maximization

A Basic Rules

Chapter 7 Marginal-Cost Pricing

7.1 Optimum Policy

7.2 Regulating Marginal-Cost Prices

7.3 Consequences for Allocation, Distribution, and Stabilization

7.4 Piecemeal Policy

Chapter 8 Ramsey Pricing

8.1 Optimum Ramsey Policy

8.2 Regulating Ramsey Prices

8.3 Influence of Ramsey Prices on Allocation, Distribution, and Stabilization

8.4 A Piecemeal Policy Interpretation of the Ramsey Optimum

Chapter 9 Rate of Return Regulation

9.1 An Intuitive Introduction

9.2 A More Rigorous Treatment

9.3 Welfare Versus Profit Maximization: The Averch-Johnson Effect

Chapter 10 Pricing with Distributional Aims

10.1 Prices Versus Taxes

10.2 Feldstein Pricing

10.3 Comparing Distributional and Allocative Pricing

B Interdependencies with the Private Economy

Chapter 11 Adjustment to Monopolistic Pricing in the Private Sector

11.1 The Second-Best Issue: Adjustment to, Versus Interference in, the Private Economy

11.2 A Model for Public Prices in an Imperfect Market Economy

11.3 A Duopoly Model for Public Prices

Chapter12 Adjustment to Rationed Markets

12.1 Rationed Labor Market

12.2 Capacity Limits of Public Transportation

C Time-Dependent Pricing

Chapter 13 Pricing through Time and Adjustment Clauses

Chapter 14 Peak-Load Pricing

14.1 Setting the Problem

14.2 A Model with Excess Demand and Rationing

D Public Pricing When Quality Matters

Chapter 15 Different Approaches Towards Optimal Quality

15.1 Quality I: Distinguishing Different Goods

15.2 Quality II: Using Continuous Quality Indicators

Part Three Positive Theory: Public Pricing Policies to Achieve Politicians' and Managers' Aims

A Politicians and Bureaucrats

Chapter 16 Winning Votes

Chapter 17 Maximizing Budgets

B Managers of Public Enterprises and Unions

Chapter 18 Maximizing Output or Revenue, Minimizing Energy Inputs

Chapter 19 Minimizing Price Indices

Chapter 20 The Influence of Unions

Chapter 21 Quality in Positive Theory Models

Chapter 22 A Set of Axioms for Prices to Achieve a Fair Allocation of Costs

Part Four Application of the Theoretical Results: The Example of London Transport

Chapter 23 Economic Theory and Empirical Analysis (I): Specifying Demand

23.1 Microeconomics of the Representative Consumer

23.2 Some Basic Principles for Estimating Systems of Demand Functions

23.3 Desirable Properties of a Demand System

23.4 The Almost Ideal Demand System

Chapter 24 Economic Theory and Empirical Analysis (II): Specifying Technology

24.1 Duality

24.2 Some Basic Principles of Estimating Technology

24.3 Desirable Properties of the Firm's Technology Representation

24.4 Long-Run Versus Short-Run Marginal Costs

Chapter 25 Bus and Underground Services in London

25.1 Recent Organizational and Political History

25.2 Recent Economic History

25.3 Empirical Studies on Bus and Underground Demand

25.4 Empirical Studies on Bus and Underground Costs

Chapter 26 Estimating Normative and Positive Prices for Bus and Underground in London

26.1 The AIDS Specification of Demand

26.2 The Translog Specification of Factor Demand Functions

26.3 Optimal Prices for London Bus and Underground Services


Appendix 1 The Size of the Public Enterprise Sector in Europe

Appendix 2 The Size of the Government and Regulated Enterprise Sector in the United States 431

List of Symbols




Advanced Textbooks in Economics, Volume 23: Public Enterprise Economics: Theory and Application focuses on economics, mathematical economics, and econometrics, including microeconomics, marginal-cost pricing, taxes, and income effects.

The manuscript takes a look at the essential parts of public sector pricing models, normative optimum theory, and normative piecemeal theory. Discussions focus on welfare improvements with non-tight constraints, welfare -improving increases of public inefficiency, conditions for optimal prices and quantities, compensating for income effects, and conditions for optimal quality. The book then ponders on marginal-cost pricing, Ramsey pricing, rate of return regulation, and pricing with distributional aims. Topics include comparing distributional and allocative pricing, prices versus taxes, optimum Ramsey policy, influence of Ramsey prices on allocation, distribution, and stabilization, and consequences for allocation, distribution, and stabilization. The publication examines bus and underground services in London, economic theory and empirical analysis, and different approaches towards optimal quality, including empirical studies on bus and underground demand, organizational and political history, and microeconomics of the representative consumer.

The book is a valuable source of data for researchers interested in public enterprise economics.


No. of pages:
© North Holland 1989
North Holland
eBook ISBN:

About the Editors

C. J. Bliss Editor

M. D. Intriligator Editor

About the Authors

Dieter Bös Author