A two-part tariff exists when a fixed payment is made before any purchases are allowed. When buyers visit a monopolist more than once per period, they have the ability to substitute between visits and consumption per visit. This substitution weakens the surplus-extracting power of a two-part tariff; and in some cases it is more profitable to abandon the entry fee altogether.
{"title":"Two-Part Tariffs and Monopoly Profits When Visits Are Variable","authors":"Owen R. Phillips, R. Battalio","doi":"10.2307/3003661","DOIUrl":"https://doi.org/10.2307/3003661","url":null,"abstract":"A two-part tariff exists when a fixed payment is made before any purchases are allowed. When buyers visit a monopolist more than once per period, they have the ability to substitute between visits and consumption per visit. This substitution weakens the surplus-extracting power of a two-part tariff; and in some cases it is more profitable to abandon the entry fee altogether.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"1 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":"124374789","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 note presents a formal reconciliation of two approaches to the analysis of peak and off-peak pricing. It argues that the differences reside in varying conceptions of the time period over which costs and revenues are calculated. Both versions yield formally correct solutions so that no substantive problems emerge, as noted in the reconciliation. However, varying rates of production, implicit in the two approaches, may violate the cost linearity assumptions made in both and hence vitiate the traditional conclusions.
{"title":"The Theory of Peak-Load Pricing: A Final Note","authors":"G. W. Wilson","doi":"10.2307/3003080","DOIUrl":"https://doi.org/10.2307/3003080","url":null,"abstract":"This note presents a formal reconciliation of two approaches to the analysis of peak and off-peak pricing. It argues that the differences reside in varying conceptions of the time period over which costs and revenues are calculated. Both versions yield formally correct solutions so that no substantive problems emerge, as noted in the reconciliation. However, varying rates of production, implicit in the two approaches, may violate the cost linearity assumptions made in both and hence vitiate the traditional conclusions.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"17 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":"127889516","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 is concerned with jobs for which nontrivial job-specific skills and task-specific knowledge evolve, in a learning by doing fashion, during the course of a worker's employment. Otherwise qualified but inexperienced workers cannot be regarded as the equivalent of job incumbents under such circumstances. The underlying factors that give rise to job idiosyncracies and the contractual properties of four alternative contracting modes for jobs of this kind are evaluated with the assistance of what we refer to as the "organizational failures framework." Individualistic contracting modes of the contingent claims contracting, spot contracting, and authority relation types are examined. The implied demands on the rationality limits of human actors are shown to be severe and the associated costs of adapting to changing job and market circumstances are shown to be considerable for jobs of the idiosyncratic kind. Collectivizing the employment agreement alleviates these conditions in that it serves to economize on transaction costs in both bounded rationality and attenuate opportunism. The upshot is that "internal labor markets," which others have interpreted in mainly noneconomic terms, can be supplied with an efficiency rationale -- additionally if not instead.
{"title":"Understanding the employment relation: the analysis of idiosyncratic exchange","authors":"O. Williamson, M. Wachter, J. Harris","doi":"10.2307/3003224","DOIUrl":"https://doi.org/10.2307/3003224","url":null,"abstract":"This paper is concerned with jobs for which nontrivial job-specific skills and task-specific knowledge evolve, in a learning by doing fashion, during the course of a worker's employment. Otherwise qualified but inexperienced workers cannot be regarded as the equivalent of job incumbents under such circumstances. The underlying factors that give rise to job idiosyncracies and the contractual properties of four alternative contracting modes for jobs of this kind are evaluated with the assistance of what we refer to as the \"organizational failures framework.\" Individualistic contracting modes of the contingent claims contracting, spot contracting, and authority relation types are examined. The implied demands on the rationality limits of human actors are shown to be severe and the associated costs of adapting to changing job and market circumstances are shown to be considerable for jobs of the idiosyncratic kind. Collectivizing the employment agreement alleviates these conditions in that it serves to economize on transaction costs in both bounded rationality and attenuate opportunism. The upshot is that \"internal labor markets,\" which others have interpreted in mainly noneconomic terms, can be supplied with an efficiency rationale -- additionally if not instead.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"84 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":"126227627","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}
* A major document in the current debate over deregulation of the U.S. domestic airlines is this report of the Subcommittee on Administrative Practice and Procedure of the Committee on the Judiciary, U.S. Senate.1 Stephen G. Breyer served as special counsel to the subcommittee during the preparation of the report and the hearings that preceded it. The report does not break much new ground in its technical analysis of regulated competition in the airline industry. However, it provides a clear and sophisticated synthesis of recent economic analyses of the industry and develops new evidence on the Civil Aeronautics Board's procedures and operations. The committee's recommendations strongly support relaxed controls over entry and pricing in domestic air transportation, as well as calling for reform of some shocking procedures of the Board. During the last two decades a number of economists have studied the effect of regulation on the structure and performance of the air transport industry. Their findings display a remarkable consensus. The industry's intrinsic structural characteristics include only moderate barriers to entry and levels of product differentiation, so that an unregulated airline industry would display something close to competitive performance although seller concentration would be high in individual city-pair markets. The actual industry, as regulated since 1938, has been afflicted with blockaded entry and rigid prices that are often set high enough above minimum attainable marginal costs that extensive nonprice is induced (principally expanded flight schedules leading to low load factors). This nonprice competition elevates costs substantially over their minimum attainable level, as does the rigidity of the route structures imposed on carriers by the Board's certification procedures. The airlines have not earned more than a normal rate of return on their investment, over the long run, but they have incurred costs significantly higher than the minimum attainable. The report's analysis of the effect of the Board's policies follows the lead of several scholars2 in drawing heavily on a comparison between largely unregulated airlines competing in the intrastate markets of California and Texas and the regulated interstate industry. The report provides (pp. 40-53) a careful analysis of the factors that might explain the markedly lower fares found in these intrastate markets-30 to 50 percent below interstate city-pair markets of com-
*美国参议院司法委员会行政实践和程序小组委员会的这份报告是当前关于美国国内航空公司放松管制的辩论中的一份主要文件。1 Stephen G. Breyer在准备这份报告和之前的听证会期间担任该小组委员会的特别顾问。该报告在对航空业受监管竞争的技术分析方面并没有什么新突破。然而，它对航空业的最新经济分析提供了清晰而复杂的综合，并为民航局的程序和运作提供了新的证据。委员会的建议强烈支持放松对国内航空运输进入和定价的管制，并呼吁改革联委会一些令人震惊的程序。在过去的二十年中，许多经济学家研究了管制对航空运输业结构和绩效的影响。他们的研究结果显示了一个显著的共识。该行业的内在结构特征包括只有适度的进入壁垒和产品差异化水平，因此，一个不受监管的航空业将显示出接近竞争的表现，尽管卖方在个别城市对市场中的集中度很高。实际的航空业，自1938年以来就受到监管，一直受到进入壁垒和刚性价格的困扰，这些价格往往高于最低可达到的边际成本，从而引发了广泛的非价格行为(主要是导致低载客率的扩大航班时间表)。这种非价格竞争大大提高了成本，大大超过了可达到的最低水平，正如航空管理局的核证程序对承运人施加的路线结构的刚性一样。从长期来看，航空公司的投资回报率并没有超过正常水平，但它们所承担的成本远远高于可达到的最低水平。报告对委员会政策影响的分析遵循了几位学者的观点，他们大量引用了在加州和德克萨斯州的州内市场上竞争的基本上不受管制的航空公司与受管制的州际航空公司之间的比较。该报告提供了(第40-53页)仔细分析了可能解释这些州内市场票价明显较低的因素——比州际城市对市场低30%至50%
{"title":"The Kennedy Subcommittee's Civil Aeronautics Board Practices and Procedures","authors":"R. Caves","doi":"10.2307/3003288","DOIUrl":"https://doi.org/10.2307/3003288","url":null,"abstract":"* A major document in the current debate over deregulation of the U.S. domestic airlines is this report of the Subcommittee on Administrative Practice and Procedure of the Committee on the Judiciary, U.S. Senate.1 Stephen G. Breyer served as special counsel to the subcommittee during the preparation of the report and the hearings that preceded it. The report does not break much new ground in its technical analysis of regulated competition in the airline industry. However, it provides a clear and sophisticated synthesis of recent economic analyses of the industry and develops new evidence on the Civil Aeronautics Board's procedures and operations. The committee's recommendations strongly support relaxed controls over entry and pricing in domestic air transportation, as well as calling for reform of some shocking procedures of the Board. During the last two decades a number of economists have studied the effect of regulation on the structure and performance of the air transport industry. Their findings display a remarkable consensus. The industry's intrinsic structural characteristics include only moderate barriers to entry and levels of product differentiation, so that an unregulated airline industry would display something close to competitive performance although seller concentration would be high in individual city-pair markets. The actual industry, as regulated since 1938, has been afflicted with blockaded entry and rigid prices that are often set high enough above minimum attainable marginal costs that extensive nonprice is induced (principally expanded flight schedules leading to low load factors). This nonprice competition elevates costs substantially over their minimum attainable level, as does the rigidity of the route structures imposed on carriers by the Board's certification procedures. The airlines have not earned more than a normal rate of return on their investment, over the long run, but they have incurred costs significantly higher than the minimum attainable. The report's analysis of the effect of the Board's policies follows the lead of several scholars2 in drawing heavily on a comparison between largely unregulated airlines competing in the intrastate markets of California and Texas and the regulated interstate industry. The report provides (pp. 40-53) a careful analysis of the factors that might explain the markedly lower fares found in these intrastate markets-30 to 50 percent below interstate city-pair markets of com-","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"40 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":"126498184","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}
A number of experiments designed to test the feasibility of seasonal-time-of-day pricing are currently underway in the United States. This paper addresses some of the problems that these experiments are likely to encounter, and describes a methodology for measuring the welfare benefits and costs from STD pricing. The importance of a well-articulated model of consumer demand as part of the design of an experiment is stressed. It is suggested that in the Southern and Southwestern parts of the country, realistic seasonal differentials may exhaust most of the welfare benefits of moving to marginal cost pricing.
{"title":"Experiments in Seasonal-Time-of-Day Pricing of Electricity to Residential Users","authors":"J. Wenders, L. Taylor","doi":"10.2307/3003271","DOIUrl":"https://doi.org/10.2307/3003271","url":null,"abstract":"A number of experiments designed to test the feasibility of seasonal-time-of-day pricing are currently underway in the United States. This paper addresses some of the problems that these experiments are likely to encounter, and describes a methodology for measuring the welfare benefits and costs from STD pricing. The importance of a well-articulated model of consumer demand as part of the design of an experiment is stressed. It is suggested that in the Southern and Southwestern parts of the country, realistic seasonal differentials may exhaust most of the welfare benefits of moving to marginal cost pricing.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"22 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":"126537159","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}
? Fisher and McGowan (hereafter F-M), commenting on our paper (hereafter D-N), claim that our "very setup assumes that utility is generated by adver? tising." In so doing, it appears to us that they have a hedonic interpretation of utility: It really measures pleasure. To us, utility is a mere numerical rep? resentation of a preference ordering. No automatic significance attaches to comparisons of different representations when preferences shift. The question then arises: What are preferences defined over? We would argue that the whole history of debates on consumer theory supports the position that preferences are defined over quantities of goods or their Lancastrian characteristics. A parameter?such as advertising?that does the job of shifting preference orderings as tastes change does not necessarily itself become an object over which preferences are defined. To see what is involved, suppose a vector x of quantities of goods and a vector f3 of product quality parameters together yield a vector z of char? acteristics, with z = g(x,0) (1)
{"title":"Advertising and Welfare: Reply","authors":"A. Dixit, V. Norman","doi":"10.2307/3003365","DOIUrl":"https://doi.org/10.2307/3003365","url":null,"abstract":"? Fisher and McGowan (hereafter F-M), commenting on our paper (hereafter D-N), claim that our \"very setup assumes that utility is generated by adver? tising.\" In so doing, it appears to us that they have a hedonic interpretation of utility: It really measures pleasure. To us, utility is a mere numerical rep? resentation of a preference ordering. No automatic significance attaches to comparisons of different representations when preferences shift. The question then arises: What are preferences defined over? We would argue that the whole history of debates on consumer theory supports the position that preferences are defined over quantities of goods or their Lancastrian characteristics. A parameter?such as advertising?that does the job of shifting preference orderings as tastes change does not necessarily itself become an object over which preferences are defined. To see what is involved, suppose a vector x of quantities of goods and a vector f3 of product quality parameters together yield a vector z of char? acteristics, with z = g(x,0) (1)","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"20 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":"125730484","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}
A method for calculating the marginal cost of industrial power cuts is developed. Firms are assumed to hedge against outages by acquiring back-up generators. The marginal cost of back-up power enables us to infer the marginal cost of a power cut.
{"title":"A Simple Method for Evaluating the Marginal Cost of Unsupplied Electricity","authors":"B. Bental, S. Ravid","doi":"10.2307/3003447","DOIUrl":"https://doi.org/10.2307/3003447","url":null,"abstract":"A method for calculating the marginal cost of industrial power cuts is developed. Firms are assumed to hedge against outages by acquiring back-up generators. The marginal cost of back-up power enables us to infer the marginal cost of a power cut.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"12 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":"121859564","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}
{"title":"Tradeable Shares and the Supply-Side of Corporate Development: Reply","authors":"R. Ekelund, R. Tollison","doi":"10.2307/3003557","DOIUrl":"https://doi.org/10.2307/3003557","url":null,"abstract":"","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"9 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":"122264005","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 attempts a generalization of both the theory of the labor-managed firm and that of the managerial firm by allowing all members of the firm to participate in decisionmaking and sharing of profits. We demonstrate that under rather plausible assumptions, and independently of the objective function of the firm, some profit sharing and participation in decisionmaking are required for Pareto efficiency. The allocation relations for factors of production that obtain under different decision-making structures are shown to be substantially different from each other and also different from what pure profit maximizing would indicate.
{"title":"On the efficiency of profit sharing and labor participation in management","authors":"A. Steinherr","doi":"10.2307/3003303","DOIUrl":"https://doi.org/10.2307/3003303","url":null,"abstract":"This paper attempts a generalization of both the theory of the labor-managed firm and that of the managerial firm by allowing all members of the firm to participate in decisionmaking and sharing of profits. We demonstrate that under rather plausible assumptions, and independently of the objective function of the firm, some profit sharing and participation in decisionmaking are required for Pareto efficiency. The allocation relations for factors of production that obtain under different decision-making structures are shown to be substantially different from each other and also different from what pure profit maximizing would indicate.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"20 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":"127989838","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 examines the effect of costly litigation and imperfect information on the quality of output. An equilibrium is described in which consumers are uncertain about the result of a lawsuit. The findings show that for a wide range of due care standards there will be both negligent and nonnegligent firms in the market. Furthermore, as the population becomes more risk averse the proportion of output produced by negligent firms increases. If absolute risk aversion decreases as income increases, and there is market segmentation, reliance on litigation to control product quality will have undesirable distributional effects.
{"title":"Imperfect Information, Costly Litigation, and Product Quality","authors":"M. Simon","doi":"10.2307/3003515","DOIUrl":"https://doi.org/10.2307/3003515","url":null,"abstract":"This article examines the effect of costly litigation and imperfect information on the quality of output. An equilibrium is described in which consumers are uncertain about the result of a lawsuit. The findings show that for a wide range of due care standards there will be both negligent and nonnegligent firms in the market. Furthermore, as the population becomes more risk averse the proportion of output produced by negligent firms increases. If absolute risk aversion decreases as income increases, and there is market segmentation, reliance on litigation to control product quality will have undesirable distributional effects.","PeriodicalId":177728,"journal":{"name":"The Bell Journal of Economics","volume":"26 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":"127992036","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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