| Preface | p. ix |
| Introduction | |
| The regulation of monopoly | p. 3 |
| Introduction | p. 3 |
| Problems for competition | p. 4 |
| The idea of economic welfare | p. 8 |
| The pursuit of economic welfare | p. 10 |
| Institutions of monopoly regulation | p. 12 |
| Summary | p. 16 |
| Representing economic welfare | p. 17 |
| Introduction | p. 17 |
| Individual welfare from one service | p. 18 |
| Consumer surplus | p. 18 |
| Utility and indirect utility functions | p. 22 |
| Compensating variation, equivalent variation, and consumer surplus | p. 25 |
| Individual welfare from many services | p. 29 |
| From individual welfare to social welfare | p. 31 |
| Socially optimal pricing | p. 34 |
| The decreasing average cost problem | p. 37 |
| The marginal cost-pricing "solution" | p. 38 |
| Second-best pricing with decreasing cost | p. 39 |
| Nonuniform pricing | p. 41 |
| Information and welfare | p. 42 |
| Risk and welfare | p. 49 |
| Summary | p. 51 |
| Pursuing economic welfare | p. 53 |
| Introduction | p. 53 |
| The great regulator: competition | p. 54 |
| Government intervention | p. 58 |
| Behavior of a statutory monopoly | p. 62 |
| Management effort | p. 63 |
| The price level | p. 64 |
| Price discrimination | p. 65 |
| Quantity-dependent pricing | p. 68 |
| Quality and price | p. 69 |
| Incentive schemes | p. 71 |
| Reference points | p. 72 |
| The principal-agent problem | p. 74 |
| Entry and contestable markets | p. 77 |
| Sustainable prices | p. 80 |
| Summary | p. 86 |
| Optimal pricing | |
| Ideal public pricing | p. 91 |
| Introduction | p. 91 |
| Limitations of marginal cost pricing | p. 92 |
| Peak-load pricing | p. 94 |
| Single technology | p. 95 |
| Diverse technology | p. 101 |
| Peak-load pricing under uncertainty | p. 105 |
| Nonuniform pricing | p. 109 |
| Cost and price dimensions | p. 111 |
| Quantity-dependent nonuniform pricing | p. 115 |
| Externality pricing | p. 116 |
| Summary | p. 121 |
| Second-best public pricing | p. 124 |
| Introduction | p. 124 |
| The Ramsey optimal taxation principle | p. 124 |
| Second-best pricing | p. 127 |
| Solutions with private goods interaction | p. 131 |
| Uniform proportional quantity change | p. 132 |
| Uniform ratio of price to marginal cost | p. 134 |
| Second-best pricing under uncertainty | p. 136 |
| A monopoly solution | p. 137 |
| Efficient nonprice rationing | p. 139 |
| Inefficient nonprice rationing | p. 142 |
| Second-best nonuniform pricing | p. 145 |
| Two-part pricing | p. 146 |
| Quantity-dependent pricing | p. 150 |
| Summary | p. 154 |
| Equity in public pricing | p. 158 |
| Introduction | p. 158 |
| Anonymous equity | p. 158 |
| Pricing and distributional equity | p. 162 |
| Pricing for beneficial goods | p. 166 |
| Combining distributional equity with beneficial goods | p. 172 |
| Nonuniform pricing and equity | p. 174 |
| Two-part pricing | p. 174 |
| Quantity-dependent pricing | p. 176 |
| Governmental decisions and equity | p. 176 |
| Summary | p. 178 |
| Institutions of monopoly regulation | |
| Rate-of-return regulation | p. 183 |
| Introduction | p. 183 |
| The origins of rate-of-return regulation | p. 184 |
| Finance under rate-of-return regulation | p. 190 |
| The regulatory agencies | p. 194 |
| Economic consequences of rate-of-return regulation | p. 197 |
| Input inefficiency | p. 198 |
| Output inefficiency | p. 201 |
| Technological change | p. 202 |
| Summary | p. 203 |
| Input choices under rate-of-return regulation | p. 205 |
| Introduction | p. 205 |
| Schizophrenia in input choice | p. 206 |
| Gold plating | p. 211 |
| Other goals and profit constraints | p. 215 |
| Dynamic elements | p. 217 |
| Demand uncertainty | p. 219 |
| Input price uncertainty and automatic adjustment clauses | p. 222 |
| Empirical evidence | p. 223 |
| Summary | p. 225 |
| Pricing under rate-of-return regulation | p. 230 |
| Introduction | p. 230 |
| Capital bias and monopolistic elements in pricing | p. 231 |
| Illustrations of pricing bias | p. 236 |
| Peak-load pricing and quality | p. 241 |
| Nonuniform pricing | p. 243 |
| Two-part pricing | p. 243 |
| Quantity-dependent pricing | p. 249 |
| Dynamic elements | p. 250 |
| Empirical evidence | p. 253 |
| Summary | p. 254 |
| The budget-constrained public enterprise | p. 257 |
| Introduction | p. 257 |
| Pricing rules to maximize the budget | p. 259 |
| Entry protection and pricing discretion | p. 263 |
| The example of the U.S. Postal Service | p. 265 |
| A complex problem: urban transit | p. 268 |
| A second-best rush-hour transit fare | p. 270 |
| Input taxes and second-best off-peak transit fares | p. 275 |
| Public enterprise for transportation | p. 277 |
| Summary | p. 278 |
| Conclusion | |
| Conclusion | p. 283 |
| Introduction | p. 283 |
| Institutional design | p. 283 |
| Conflicting interests in regulation | p. 286 |
| Summary | p. 288 |
| References | p. 291 |
| Index | p. 311 |
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