Amtrak has recetly arrived at a new contract with a number of its supplying railroads representing over 50 percent of its passenger service. The new contract represents a major regulatory innovation in which payments to the railroads are based on quality of service, according to a fixed schedule. Payments are dependent upon frequency of arrival on time, the total magnitude of delays, the cleanliness and functioning of cars and equipment, and improvements in schedules. The article discusses the features of arrangements in earlier contracts that served as inducements for deterioration in quality of passenger service and argues that the new contract offers hope for the first time in recent years of substantial improvements in the quality of passenger service.
{"title":"PAYMENT BY PERFORMANCE IN RAIL PASSENGER TRANSPORTATION: AN INNOVATION IN AMTRAK'S OPERATIONS","authors":"W. Baumol","doi":"10.2307/3003225","DOIUrl":"https://doi.org/10.2307/3003225","url":null,"abstract":"Amtrak has recetly arrived at a new contract with a number of its supplying railroads representing over 50 percent of its passenger service. The new contract represents a major regulatory innovation in which payments to the railroads are based on quality of service, according to a fixed schedule. Payments are dependent upon frequency of arrival on time, the total magnitude of delays, the cleanliness and functioning of cars and equipment, and improvements in schedules. The article discusses the features of arrangements in earlier contracts that served as inducements for deterioration in quality of passenger service and argues that the new contract offers hope for the first time in recent years of substantial improvements in the quality of passenger service.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1975-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127348582","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It is feasible in some competitive equilibria with externalities to shift some externality costs among different agents in the economy. However, simply shifting costs will not, in general, result in efficient allocation decisions by all agents, since the magnitude of externality costs depends on the decisions of several agents. Comparing different resource allocations arising from two different patterns of cost bearing is thus a comparison of two inefficient equilibria. This paper explores several sets of assumptions which are sufficient to determine which allocation is more efficient. These assumptions help to identify the agent Calabresi has called the cheapest cost avoider.
{"title":"On the Assignment of Liability: The Uniform Case","authors":"P. Diamond, J. Mirrlees","doi":"10.2307/3003241","DOIUrl":"https://doi.org/10.2307/3003241","url":null,"abstract":"It is feasible in some competitive equilibria with externalities to shift some externality costs among different agents in the economy. However, simply shifting costs will not, in general, result in efficient allocation decisions by all agents, since the magnitude of externality costs depends on the decisions of several agents. Comparing different resource allocations arising from two different patterns of cost bearing is thus a comparison of two inefficient equilibria. This paper explores several sets of assumptions which are sufficient to determine which allocation is more efficient. These assumptions help to identify the agent Calabresi has called the cheapest cost avoider.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"62 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1975-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133268139","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The potential public benefits and costs of railroad diversification are examined in this article. The principal claimed benefit, that diversification will produce an increased flow of capital to the railroad industry, is unlikely to be realized. The principal cost, that management may use diversification as a means of transferring assets from railroading to other more profitable lines of business, is less a problem created by diversification than a reflection of the current financial state of the railroad industry. Railroad diversification should be neither banned nor tightly regulated. Either will further hamper a much needed process of adjustment that already has been too long delayed. Instead, diversification ought to be welcomed, for it will place a needed check on the ICC's ability to force railroads to operate in a noneconomic fashion.
{"title":"Railroad diversification: where lies the public interest?","authors":"G. Eads","doi":"10.2307/3003122","DOIUrl":"https://doi.org/10.2307/3003122","url":null,"abstract":"The potential public benefits and costs of railroad diversification are examined in this article. The principal claimed benefit, that diversification will produce an increased flow of capital to the railroad industry, is unlikely to be realized. The principal cost, that management may use diversification as a means of transferring assets from railroading to other more profitable lines of business, is less a problem created by diversification than a reflection of the current financial state of the railroad industry. Railroad diversification should be neither banned nor tightly regulated. Either will further hamper a much needed process of adjustment that already has been too long delayed. Instead, diversification ought to be welcomed, for it will place a needed check on the ICC's ability to force railroads to operate in a noneconomic fashion.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1974-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133031931","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1973-05-01DOI: 10.1007/978-94-015-7957-5_24
P. Joskow
{"title":"Cartels, Competition and Regulation in the Property-Liability Insurance Industry","authors":"P. Joskow","doi":"10.1007/978-94-015-7957-5_24","DOIUrl":"https://doi.org/10.1007/978-94-015-7957-5_24","url":null,"abstract":"","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1973-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127846314","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper reviews models used in the electricity supply industry for appraising investments, and presents some extensions. Quantities demanded and the prices of inputs and outputs are assumed to be exogenous, and the models search for investments having the lowest costs. Optimization is over several time periods. Typical decision variables considered are: choice of fossil, nuclear, single- or multipurpose hydro plant; locations of plants; directions of electrical energy transport (interconnection); timing of investments; replacement; and in all cases the optimum mode of system operation (including hydro storage policy). These variables may be analyzed by linear, non-linear, and dynamic programming as well as other methods. Both global models and optimization treatment of subproblems are reviewed.
{"title":"Models for determining least-cost investments in electricity supply","authors":"Dennis Anderson","doi":"10.2307/3003078","DOIUrl":"https://doi.org/10.2307/3003078","url":null,"abstract":"This paper reviews models used in the electricity supply industry for appraising investments, and presents some extensions. Quantities demanded and the prices of inputs and outputs are assumed to be exogenous, and the models search for investments having the lowest costs. Optimization is over several time periods. Typical decision variables considered are: choice of fossil, nuclear, single- or multipurpose hydro plant; locations of plants; directions of electrical energy transport (interconnection); timing of investments; replacement; and in all cases the optimum mode of system operation (including hydro storage policy). These variables may be analyzed by linear, non-linear, and dynamic programming as well as other methods. Both global models and optimization treatment of subproblems are reviewed.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"57 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1972-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115289753","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Many government programs which appear to be designed to help some particular industry or group do not seem to be succeeding. The explanation offered here is that the program, when inaugurated, generated transitional gains for the individuals or companies in the industry, but that these have been fully capitalized, with the result that the people in the industry now are doing no better than normal. On the other hand, the termination of the particular scheme would, in general, lead to large losses for the entrenched interests.
{"title":"The transitional gains trap","authors":"G. Tullock","doi":"10.2307/3003249","DOIUrl":"https://doi.org/10.2307/3003249","url":null,"abstract":"Many government programs which appear to be designed to help some particular industry or group do not seem to be succeeding. The explanation offered here is that the program, when inaugurated, generated transitional gains for the individuals or companies in the industry, but that these have been fully capitalized, with the result that the people in the industry now are doing no better than normal. On the other hand, the termination of the particular scheme would, in general, lead to large losses for the entrenched interests.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114963598","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article tests the efficacy of four formulas for specifying regulated utility rates. All exhibit "intertemporal bias" in that rates are disproportionately and seriously shifted forward upon current consumers ("front-end loading"), although the ICC and Consent Decree formulas yield rates less skewed than the utility and escalated utility rate formulas. "Formula bias" arises in all cases, because the ex post
{"title":"A Critical Comparison of Utility-Type Ratemaking Methodologies in Oil Pipeline Regulation","authors":"P. Navarro, Bruce C. Petersen, T. Stauffer","doi":"10.2307/3003563","DOIUrl":"https://doi.org/10.2307/3003563","url":null,"abstract":"This article tests the efficacy of four formulas for specifying regulated utility rates. All exhibit \"intertemporal bias\" in that rates are disproportionately and seriously shifted forward upon current consumers (\"front-end loading\"), although the ICC and Consent Decree formulas yield rates less skewed than the utility and escalated utility rate formulas. \"Formula bias\" arises in all cases, because the ex post","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114656062","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study presents a set of twelve monthly cross section regression analyses of the household demand for electricity. The methodology to be used is based upon a conditional demand framework which can be used to disaggregate the total household demand for electricity into the component demand functions for electricity through the media of particular appliances, even though no direct observations on specific appliance energy usage exist. The latter demand functions are used to estimate the monthly and annual average energy use for these appliances as well as the corresponding price and income elasticities.
{"title":"The Total and Appliance-Specific Conditional Demand for Electricity in the Household Sector","authors":"M. Parti, C. Parti","doi":"10.2307/3003415","DOIUrl":"https://doi.org/10.2307/3003415","url":null,"abstract":"This study presents a set of twelve monthly cross section regression analyses of the household demand for electricity. The methodology to be used is based upon a conditional demand framework which can be used to disaggregate the total household demand for electricity into the component demand functions for electricity through the media of particular appliances, even though no direct observations on specific appliance energy usage exist. The latter demand functions are used to estimate the monthly and annual average energy use for these appliances as well as the corresponding price and income elasticities.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"152 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115755759","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The analysis seeks to determine the impact of lagged regulation on a profit-maximizing firm subject to a rate-of-return constraint. We are particularly interested in the effect of lag on the accomplishment of two regulatory goals: minimum-cost production, and an output greater than that of an unconstrained monopoly. The extend to which these goals are reached depends on whether the fair rate of return is equal to the cost of capital or somewhat higher. If the two are equal, lagged regulation accomplishes both goals; this contrasts sharply with continuous regulation, where the firm is indifferent among all methods of production or levels of output that let it break even in its operations. If the rate of return is above the cost of capital, it will not always pay for the firm to alter its resource allocation from the overcapitalized level indicated by Averch and Johnson. There will, however, be some length of the lag interval above which the firm will overcapitalize by successively smaller amounts, with attendant increases in output from the Averch-Johnson level.
{"title":"The Effect of Lagged Regulation in an Averch-Johnson Model","authors":"E. Bailey, R. D. Coleman","doi":"10.2307/3003168","DOIUrl":"https://doi.org/10.2307/3003168","url":null,"abstract":"The analysis seeks to determine the impact of lagged regulation on a profit-maximizing firm subject to a rate-of-return constraint. We are particularly interested in the effect of lag on the accomplishment of two regulatory goals: minimum-cost production, and an output greater than that of an unconstrained monopoly. The extend to which these goals are reached depends on whether the fair rate of return is equal to the cost of capital or somewhat higher. If the two are equal, lagged regulation accomplishes both goals; this contrasts sharply with continuous regulation, where the firm is indifferent among all methods of production or levels of output that let it break even in its operations. If the rate of return is above the cost of capital, it will not always pay for the firm to alter its resource allocation from the overcapitalized level indicated by Averch and Johnson. There will, however, be some length of the lag interval above which the firm will overcapitalize by successively smaller amounts, with attendant increases in output from the Averch-Johnson level.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"52 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117252085","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
J. Newhouse, Albert P. Williams, B. W. Bennett, W. Schwartz
Public policy toward the geographic distribution of physicians presumes that the market fails because physicians can create their own demand. A number of government interventions attempt to correct this market failure. We derive several predictions about physical location behavior from standard location theory (i.e., assuming the market does not fail). The data generally support these predictions. At a theoretical level the ability of physicians to induce demand is neither necessary nor sufficient to demonstrate that physicians will locate only in large cities as their numbers increase. The premises of public policy toward the geographic distribution of physicians need rethinking.
{"title":"Does the Geographical Distribution of Physicians Reflect Market Failure","authors":"J. Newhouse, Albert P. Williams, B. W. Bennett, W. Schwartz","doi":"10.2307/3003469","DOIUrl":"https://doi.org/10.2307/3003469","url":null,"abstract":"Public policy toward the geographic distribution of physicians presumes that the market fails because physicians can create their own demand. A number of government interventions attempt to correct this market failure. We derive several predictions about physical location behavior from standard location theory (i.e., assuming the market does not fail). The data generally support these predictions. At a theoretical level the ability of physicians to induce demand is neither necessary nor sufficient to demonstrate that physicians will locate only in large cities as their numbers increase. The premises of public policy toward the geographic distribution of physicians need rethinking.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117337993","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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