Incomplete information and optimal market structure: public purchases from private providers

Article Abstract:

A normative model of public contracting which recognizes the social costs of provider profits, incomplete cost information, product diversity and economies of scale was developed. In an endogenous market structure, the advantage of using either a single supplier or two providers was found to be determined by the fundamentals of fixed costs and the value of variety. When information is incomplete, however, optimal market structure favors the use of sole sourcing, particularly when the social costs of provider profits are not too large.

Models, Government purchasing, Public contracts, Government contracts

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Optimal non-linear pricing with regulatory preference over customer type

Article Abstract:

An analysis of optimal non-linear pricing is presented. The analysis focuses on the pricing technique's Pareto-optimality when regulatory preference is set over customer type. General non-linear tariff schedules are established and compared with self-regulating two-part tariffs under conditions of two customertypes and general cost functions. It is shown that optimal sets can be derived under the given conditions.

Usage, Economic aspects, Pricing, Nonlinear theories

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The Optimal Rate of Decline of an Inefficient Industry

Article Abstract:

The optimal production level is derived for a firm whose business is declining because of foreign competition. A production subsidy is used to raise employment above the level suggested by market forces. A wage subsidy could be used to absorb excess labor.

Analysis, Production management, Industrial efficiency, Economic efficiency, Industry, Industries

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