IDEAS home Printed from https://ideas.repec.org/a/taf/defpea/v15y2004i1p59-69.html
   My bibliography  Save this article

Transfer prices for air force component repair decisions

Author

Listed:
  • Laura H. Baldwin *
  • Glenn A. Gotz

Abstract

In 1992, the Air Force implemented transfer pricing to manage repair decisions for most reparable components. This market-like system is intended to provide internal customers with incentives to make cost-effective repair decisions; namely, repair a broken part locally versus sending it to a repair depot. However, Air Force transfer prices diverge from marginal costs along a number of dimensions and, thereby, provide incentives to behave in ways that minimize private costs but increase system costs. An alternative structure that would cause customers to face the costs their decisions impose upon the support system is recommended.

Suggested Citation

  • Laura H. Baldwin * & Glenn A. Gotz, 2004. "Transfer prices for air force component repair decisions," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(1), pages 59-69, February.
    • Handle: RePEc:taf:defpea:v:15:y:2004:i:1:p:59-69
    DOI: 10.1080/1024269042000164496
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1024269042000164496
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1024269042000164496?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. 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.
    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. Alessandro Avenali & Tiziana D’Alfonso & Pierfrancesco Reverberi, 2022. "Optimal pricing and investment for resources with alternative uses and capacity limits," Journal of Regulatory Economics, Springer, vol. 61(3), pages 222-229, June.
    2. Thijs ten Raa, 2009. "Monopoly, Pareto and Ramsey Mark-ups," Journal of Industry, Competition and Trade, Springer, vol. 9(1), pages 57-63, March.
    3. Kopsakangas-Savolainen, Maria, 2004. "The welfare effects of different pricing schemes for electricity distribution in Finland," Energy Policy, Elsevier, vol. 32(12), pages 1429-1435, August.
    4. Richard E. Schuler, 1992. "Transportation and Telecommunications Networks: Planning Urban Infrastructure for the 21st Century," Urban Studies, Urban Studies Journal Limited, vol. 29(2), pages 297-310, April.
    5. Stefan Felder, 2004. "Drug price regulation under consumer moral hazard," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 5(4), pages 324-329, November.
    6. Stiglitz, Joseph E., 2018. "Pareto efficient taxation and expenditures: Pre- and re-distribution," Journal of Public Economics, Elsevier, vol. 162(C), pages 101-119.
    7. Brennan, Timothy J., 2000. "The Economics of Competition Policy: Recent Developments and Cautionary Notes in Antitrust and Regulation," Discussion Papers 10716, Resources for the Future.
    8. Ming Chang, 1996. "Ramsey pricing in a hierarchical structure with an application to network-access pricing," Journal of Economics, Springer, vol. 64(3), pages 281-314, October.
    9. Sajal Lahiri & Anjum Nasim, 2005. "Commercial Policy Reform in Pakistan: Opening up the Economy under Revenue Constraints," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(6), pages 723-739, November.
    10. Beria, Paolo & Grimaldi, Raffaele, 2010. "Unconventional factors of efficiency in public transport. A case study and theory," MPRA Paper 29234, University Library of Munich, Germany.
    11. 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.
    12. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484, National Bureau of Economic Research, Inc.
    13. Kenneth D. Boyer, 2016. "Three Principles for Optimal Pricing of Trackage Rights," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(2), pages 347-369, September.
    14. Olsen, Ole Jess & Munksgaard, Jesper, 1998. "Cogeneration and taxation in a liberalized Nordic power market," Utilities Policy, Elsevier, vol. 7(1), pages 23-33, March.
    15. Benjamin A. Olken & Patrick Barron, 2009. "The Simple Economics of Extortion: Evidence from Trucking in Aceh," Journal of Political Economy, University of Chicago Press, vol. 117(3), pages 417-452, June.
    16. William C. Miller, 2007. "Ramsey pricing with long run competition," Economics Bulletin, AccessEcon, vol. 12(34), pages 1-5.
    17. Button, Kenneth, 2006. "The political economy of parking charges in "first" and "second-best" worlds," Transport Policy, Elsevier, vol. 13(6), pages 470-478, November.
    18. Homburg, Stefan, 2010. "Allgemeine Steuerlehre: Kapitel 1. Grundbegriffe der Steuerlehre," EconStor Books, ZBW - Leibniz Information Centre for Economics, number 92547, December.
    19. Brown, Toby & Faruqui, Ahmad & Grausz, Léa, 2015. "Efficient tariff structures for distribution network services," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 139-149.
    20. Hahn, Robert W., 1995. "Government markets and the theory of the Nth best," Journal of Public Economics, Elsevier, vol. 57(2), pages 219-234, June.

    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:taf:defpea:v:15:y:2004:i:1:p:59-69. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/GDPE20 .

    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.