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Preise auf Grenzkostenniveau – optimal, aber unmöglich? / Prices at Marginal Cost Level – Optimal, but Impossible?: Angebotsseitige Subadditivität und nachfrageseitige Nicht-Rivalität als die zwei Seiten ökonomischer Nicht-Rivalität / Supply-side indivisibility and demand-side non-rivalry as the two sides of economic rivalry

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  • Schröder Guido

Abstract

In economics the paradox has prevailed for decades that marginal cost prices are considered to be optimal but are impossible in case of natural monopolies or public goods. Using the example of TV programmes three arguments are developed in this paper:1. Despite different practical problems the theory of natural monopolies and the theory of public goods deal with the same phenomenon of rivalry which originates from the isomorphy of the theories. The concept of “economic rivalry”, which is introduced here, and the graphic illustration of a normally shaped demand curve for the public good demonstrate an important consequence of this isomorphy: Non-rivalry in consumption leads to a natural monopoly and normal private goods can became public goods in case of subadditivities.2. In both theories the marginal cost paradox is just an apparent contradiction which can be resolved with a microeconomic approach.3. At present a marginal cost doctrine dominates in (media)economics which cannot be justified in the light of welfare or institutional economics.

Suggested Citation

  • Schröder Guido, 2006. "Preise auf Grenzkostenniveau – optimal, aber unmöglich? / Prices at Marginal Cost Level – Optimal, but Impossible?: Angebotsseitige Subadditivität und nachfrageseitige Nicht-Rivalität als die zwei Sei," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 57(1), pages 209-240, January.
    • Handle: RePEc:bpj:ordojb:v:57:y:2006:i:1:p:209-240:n:14
    DOI: 10.1515/ordo-2006-0114
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