Regulatory boundaries and efficient resource allocations in the production and transportation of a single good

Journal Article · Tue Jan 01 04:00:00 EST 1980 · South. Econ. J.; (United States)

DOI:https://doi.org/10.2307/1057147· OSTI ID:5423625

Strand, S H

This paper analyzes efficient resource allocations in the production and transportation of a single good in a spatial economy. It was demonstrated that an optimal allocation of resources maximizing net social payoff may require the franchising of decreasing-cost firms, together with marginal-cost pricing and subsidies, even though a viable competitive sector could exist in the absence of such regulation. In formulating regulatory policy in industries with both decreasing and non-decreasing cost firms, therefore, the criterion for policy makers should not be to confine government regulation to those areas and decisions which competition cannot regulate. Restricting entry and using correct output and pricing policies as needed would effectively establish regulatory boundaries for decreasing-cost firms. It was also shown that formation of such regulatory boundaries must necessarily consider production technologies in and transportation technologies among other markets in a spatial economy. Determination of the quantity to be produced in any market is interdependent with the determination of the quantity produced and consumed in all markets and of the quantities transported between markets.

• Research Organization: Syracuse Univ., NY
• OSTI ID: 5423625
• Journal Information: South. Econ. J.; (United States), Journal Name: South. Econ. J.; (United States) Vol. 46:3; ISSN SECJA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
290400 -- Energy Planning & Policy-- Energy Resources
293000 -- Energy Planning & Policy-- Policy
Legislation
& Regulation
ALLOCATIONS
COMMODITIES
COMPETITION
FINANCIAL INCENTIVES
MARGINAL-COST PRICING
MARKET
PRICES
PRODUCTION
REGULATIONS
RESOURCES
SUBSIDIES
TRANSPORT