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Existence and uniqueness of marginal cost pricing equilibrium

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  • Kevin Currier

Abstract

This paper considers a regulated monopoly that is subject to a marginal cost pricing policy. A marginal cost pricing equilibrium is a price-subsidy combination for which price equals marginal production cost and any losses are offset by the lump-sum subsidy. Employing basic degree theoretic results, conditions are established under which a marginal cost pricing equilibrium exists and is unique. Copyright International Atlantic Economic Society 1997

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  • Kevin Currier, 1997. "Existence and uniqueness of marginal cost pricing equilibrium," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 25(3), pages 312-317, September.
    • Handle: RePEc:kap:atlecj:v:25:y:1997:i:3:p:312-317
    DOI: 10.1007/BF02298413
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    References listed on IDEAS

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    1. Bonnisseau, Jean-Marc & Cornet, Bernard, 1988. "Existence of equilibria when firms follow bounded losses pricing rules," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 119-147, April.
    2. Kamiya, Kazuya, 1988. "Existence and uniqueness of equilibria with increasing returns," Journal of Mathematical Economics, Elsevier, vol. 17(2-3), pages 149-178, April.
    3. Boiteux, M., 1971. "On the management of public monopolies subject to budgetary constraints," Journal of Economic Theory, Elsevier, vol. 3(3), pages 219-240, September.
    4. Currier, Kevin M., 1994. "Existence, uniqueness, and computation of sustainable prices," Mathematical Social Sciences, Elsevier, vol. 27(1), pages 105-109, February.
    5. Kazuo Nishimura, 1981. "Kuhn's Intensity Hypothesis Revisited," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 48(2), pages 351-354.
    6. Debreu, Gerard, 1970. "Economies with a Finite Set of Equilibria," Econometrica, Econometric Society, vol. 38(3), pages 387-392, May.
    7. Paulina Beato, 1982. "The Existence of Marginal Cost Pricing Equilibria with Increasing Returns," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 669-688.
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    Cited by:

    1. Oggioni, Giorgia & Smeers, Yves, 2012. "Evaluating the application of different pricing regimes and low carbon investments in the European electricity market," Energy Economics, Elsevier, vol. 34(5), pages 1356-1369.

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