Economics Dictionary of ArgumentsHome
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| Natural monopolies: A natural monopoly is a market structure in which a single firm can profitably produce and supply an entire market for a good or service. This occurs when the economies of scale are so large that it is more efficient for one firm to produce the good or service than for multiple firms to compete. This is often the case for goods or services that require a large upfront investment in infrastructure. See also Monopolies, Infrastructure, Markets, Supply, Competition._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Joseph E. Stiglitz on Natural Monopolies - Dictionary of Arguments
Henderson I 58 Natural monopolies/Stiglitz/Henderson/Globerman: In discussing natural monopoly, [Stiglitz] noted a policy that economists have advocated for about a century: have the government "provide a subsidy and insist that the firm charge a price equal to marginal cost." He continued: „Such a policy is sometimes referred to as "first-best." It ignores, however, the question of how the revenues required to pay the subsidy are to be raised; it assumes, in particular, that there are no distortions associated with raising this revenue. Moreover, it assumes that the government knows the magnitude of the subsidy that will enable the firm to be viable.“ (Stiglitz, 1988(1): 185) Later Stiglitz stated: „[T]he political mechanism is a far from perfect means for allocating resources, since it is subject to manipulation by special-interest groups. Further, any regulations and rules devised in the public sector have to be enforced by a bureaucracy with all of the limitations noted earlier. (Stiglitz, 1988(1): 220) >Subsidies/Stiglitz, >Interventions, >Interventionism. 1. Stiglitz, Joseph E. (1988). Economics of the Public Sector, 2nd edition. W.W. Norton._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconStiglitz I Joseph E. Stiglitz Anthony B. Atkinson The design of tax structure: Direct versus indirect taxation 1976 Henderson I David R. Henderson Steven Globerman The Essential UCLA School of Economics Vancouver: Fraser Institute. 2019 |
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