IDEAS home Printed from https://ideas.repec.org/a/bpj/ordojb/v57y2006i1p209-240n14.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/ordo-2006-0114
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/ordo-2006-0114?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. William J. Baumol & Janusz A. Ordover, 1977. "On The Optimality Of Public‐Goods Pricing With Exclusion Devices," Kyklos, Wiley Blackwell, vol. 30(1), pages 5-21, February.
    2. Thomas Krattenmaker & Lucas Powe, 1994. "Regulating Broadcast Programming," Books, American Enterprise Institute, number 53082, September.
    3. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 11-32.
    4. Samuelson, Paul A, 1969. "Contrast between Welfare Conditions for Joint Supply and for Public Goods," The Review of Economics and Statistics, MIT Press, vol. 51(1), pages 26-30, February.
    5. R. B. Ekelund & Jr., 1968. "Jules Dupuit and the Early Theory of Marginal Cost Pricing," Journal of Political Economy, University of Chicago Press, vol. 76(3), pages 462-462.
    6. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    7. Nancy Ruggles, 1949. "The Welfare Basis of the Marginal Cost Pricing Principle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 17(1), pages 29-46.
    8. Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-283, June.
    9. Demsetz, Harold, 1970. "The Private Production of Public Goods," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 293-306, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hummel Jeffrey Rogers & Lavoie Don, 1994. "National Defense And The Public-Goods Problem," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 5(2-3), pages 353-378, June.
    2. Gaudry, Marc, 2018. "The utility of journeys, from Dupuit's constant-time bridge crossing hops to commutes of chosen duration and reliability in the Paris region," Transport Policy, Elsevier, vol. 70(C), pages 53-68.
    3. Boeters, Stefan, 2014. "Optimally differentiated carbon prices for unilateral climate policy," Energy Economics, Elsevier, vol. 45(C), pages 304-312.
    4. Yew-Kwang Ng, 2017. "Towards a Theory of Third-Best," Pacific Economic Review, Wiley Blackwell, vol. 22(2), pages 155-166, May.
    5. Ryan C. Amacher & Robert D. Tollison & Thomas D. Willett, 1975. "A Budget Size in a Democracy: A Review of the Arguments," Public Finance Review, , vol. 3(2), pages 99-122, April.
    6. Olesen, O. B., 1995. "Some unsolved problems in data envelopment analysis: A survey," International Journal of Production Economics, Elsevier, vol. 39(1-2), pages 5-36, April.
    7. Sergey Sinelnikov & Pavel Kadochnikov & Ilya Trunin, 2008. "From Elections to Appointments of the Regional Governors: Major Challenges and Outcomes," Published Papers 2, Gaidar Institute for Economic Policy, revised 2008.
    8. Boadway, Robin, 1999. "Le rôle de la théorie de l’optimum du second rang en économie publique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(1), pages 29-65, mars-juin.
    9. Peyton Young, H., 1998. "Cost allocation, demand revelation, and core implementation," Mathematical Social Sciences, Elsevier, vol. 36(3), pages 213-228, December.
    10. Russell Pittman, 2003. "A Note on Non-Discriminatory Access to Railroad Infrastructure," Industrial Organization 0303004, University Library of Munich, Germany.
    11. John F. Johnston, 1975. "Utility Interdependence and Redistribution: Methodological Implications for Welfare Economics and the Theory of the Public Household," Public Finance Review, , vol. 3(3), pages 195-228, July.
    12. Roy D. Adams & Ken McCormick, 1993. "The Traditional Distinction between Public and Private Goods Needs to Be Expanded, Not Abandoned," Journal of Theoretical Politics, , vol. 5(1), pages 109-116, January.
    13. Deb, Kaushik & Filippini, Massimo, 2011. "Estimating welfare changes from efficient pricing in public bus transit in India," Transport Policy, Elsevier, vol. 18(1), pages 23-31, January.
    14. Stefan Boeters, 2014. "Optimally Differentiated Carbon Prices for Unilateral Climate Policy," CPB Discussion Paper 283.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Nicolas Astier, 2021. "Second‐best pricing for incomplete market segments: Application to electricity pricing," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(6), pages 1287-1311, December.
    16. Holguin-Veras, Jose & Jara-Diaz, Sergio, 1998. "Optimal pricing for priority service and space allocation in container ports," Transportation Research Part B: Methodological, Elsevier, vol. 33(2), pages 81-106, April.
    17. Schmalensee, Richard, 1981. "Output and Welfare Implications of Monopolistic Third-Degree Price Discrimination," American Economic Review, American Economic Association, vol. 71(1), pages 242-247, March.
    18. Markus C. Arnold & Eva Ponick, 2006. "Kommunikation im Groves-Mechanismus — Ergebnisse eines Laborexperiments," Schmalenbach Journal of Business Research, Springer, vol. 58(1), pages 89-120, February.
    19. Lau, Stephanie, 2011. "Investment incentives in bilateral trading," Games and Economic Behavior, Elsevier, vol. 73(2), pages 538-552.
    20. repec:ebl:ecbull:v:12:y:2005:i:8:p:1-4 is not listed on IDEAS
    21. Tafreshian, Amirmahdi & Masoud, Neda, 2022. "A truthful subsidy scheme for a peer-to-peer ridesharing market with incomplete information," Transportation Research Part B: Methodological, Elsevier, vol. 162(C), pages 130-161.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:ordojb:v:57:y:2006:i:1:p:209-240:n:14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.