Why Regulate UtilitiesDOC版方便引用Word文档下载推荐.docx

Why Regulate UtilitiesDOC版方便引用Word文档下载推荐.docx

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Inthispaper,Ishallarguethattheassertedrelationshipbetweenmarketconcentrationandcompetitioncannotbederivedfromexistingtheoreticalconsiderationsandthatitisbasedlargelyonanincorrectunderstandingoftheconceptofcompetitionorrivalry.Thestrongestapplicationoftheassertedrelationshipisintheareaofutilityregulationsince,ifweassumescaleeconomiesinproduction,itcanbededucedthatonlyonefirmwillproducethecommodity.Thelogicalvalidityorfalsityoftheassertedrelationshipshouldrevealitselfmostclearlyinthiscase.

Althoughpublicutilityregulationrecentlyhasbeencriticizedbecauseofitsineffectivenessorbecauseoftheundesirableindirecteffectsitproduces,thebasicintellectualargumentsforbelievingthattrulyeffectiveregulationisdesirablehavenotbeenchallenged.Eventhosewhoareinclinedtorejectgovernmentregulationorownershipofpublicutilitiesbecausetheybelievethesealternativesaremoreundesirablethanprivatemonopoly,implicitlyaccepttheintellectualargumentsthatunderlieregulation.

Theeconomictheoryofnaturalmonopolyisexceedinglybriefand,weshallsee,exceedinglyunclear.Currentdoctrineisreflectedintworecentstatementsofthetheory.Samuelsonwrites:

Underpersistingdecreasingcostsforthefirm,oneorafewofthemwillsoexpandtheirq’sastobecomeasignificantpartofthemarketfortheindustry’stotalQ.Wewouldthenendup

（1）withasinglemonopolistwhodominatestheindustry;

（2）withafewlargesellerswhotogetherdominatetheindustry...or（3）withsomekindofimperfectionofcompetitionthat,ineitherastablewayorinconnectionwithaseriesofintermittentpricewars,representsanimportantdeparturefromtheeconomist'

smodelof“perfect”competitionwhereinnofirmhasanycontroloverindustryprice.

AlchianandAllenviewtheproblemasfollows:

Ifaproductisproducedundercostconditionssuchthatlargerrates…[would]meanloweraveragecostperunit,…onlyonefirmcouldsurvive;

ifthereweretwofirms,onecouldexpandtoreducecostsandsellingpriceandtherebyeliminatetheother.Inviewoftheimpossibilityofmorethanonefirm’sbeingprofitable,twoistoomany.Butifthereisonlyone,thatincumbentfirmmaybeabletosetpricesabovefree-entrycostsforalongtime.Eitherresourcesarewastedbecausetoomanyareintheindustry,orthereisjustonefirm,whichwillbeabletochargemonopolyprices.

Atthispointitwillbeusefultostateexplicitlytheinterpretationofnaturalmonopolyusedinthispaper.If,becauseofproductionscaleeconomies,itislesscostlyforonefirmtoproduceacommodityinagivenmarketthanitisfortwoormorefirms,thenonefirmwillsurvive;

ifleftunregulated,thatfirmwillsetpriceandoutputatmonopolylevels;

theprice-outputdecisionofthatfirmwillbedeterminedbyprofitmaximizingbehaviorconstrainedonlybythemarketdemandforthecommodity.

Thetheoryofnaturalmonopolyisdeficientforitfailstorevealthelogicalstepsthatcarryitfromscaleeconomiesinproductiontomonopolypriceinthemarketplace.Toseethismostclearly,letusconsiderthecontractingprocessfromitsbeginning.

Whymustrivalssharethemarket?

Rivalsellerscanoffertoenterintocontractswithbuyers.Inthisbiddingcompetition,therivalwhooffersbuyersthemostfavorabletermswillobtaintheirpatronage;

thereisnoclearornecessaryreasonforbiddingrivalstoshareintheproductionofthegoodsand;

therefore,thereisnoclearreasonforcompetitioninbiddingtoresultinanincreaseinper-unitproductioncosts.

Whymusttheunregulatedmarketoutcomebemonopolyprice?

Thecompetitivenessofthebiddingprocessdependsverymuchonsuchthingsasthenumberofbidders,butthereisnoclearornecessaryreasonforproductionscaleeconomiestodecreasethenumberofbidders.Letprospectivebuyerscallforbidstoservicetheirdemands.Scaleeconomiesinservicingtheirdemandsinnowayimplythattherewillbeonebidderonly.Therecanbemanybiddersandthebidthatwinswillbethelowest.Theexistenceofscaleeconomiesintheproductionoftheserviceisirrelevanttoadeterminationofthenumberofrivalbidders.Ifthenumberofbiddersislargeorif,forotherreasons,collusionamongthemisimpractical,thecontractedpricecanbeverydosetoper-unitproductioncost.

Thedeterminantsofcompetitioninmarketnegotiationsdifferfromandshouldnotbeconfusedwiththedeterminantsofthenumberoffirmsfromwhichproductionwillissueaftercontractualnegotiationshavebeencompleted.Thetheoryofnaturalmonopolyisclearlyunclear.Economiesofscaleinproductionimplythatthebidssubmittedwillofferincreasingquantitiesatlowerper-unitcosts,butproductionscaleeconomiesimplynothingobviousabouthowcompetitivethesepriceswillbe.Ifonebiddercandothejobatlesscostthantwoormore,becauseeachwouldthenhaveasmalleroutputrate,thenthebidderwiththelowestbidpricefortheentirejobwillbeawardedthecontract,whetherthegoodbecement,electricity,stampvendingmachines,orwhatever,butthelowestbidpriceneednotbeamonopolyprice.

Thecriticismmadehereofthetheoryofnaturalmonopolycanbeunderstoodbestbyconstructinganexamplethatisfreefromirrelevantcomplications,suchasdurabilityofdistributionssystems,uncertainty,andirrationalbehavior,allofwhichmayormaynotjustifytheuseofregulatorycommissionsbutnoneofwhichisrelevanttothetheoryofnaturalmonopoly;

forthistheorydependsononebeliefonly—priceandoutputwillbeatmonopolylevelsif,duetoscaleeconomies,onlyonefirmsucceedsinproducingtheproduct.

Assumethatownersofautomobilesarerequiredtoownanddisplaynewlicenseplateseachyear.Theproductionoflicenseplatesissubjecttoscaleeconomies.

Thetheoryofnaturalmonopolyassertsthatundertheseconditionstheownersofautomobileswillpurchaseplatesfromonefirmonlyandthatfirm,intheabsenceofregulation,willchargeamonopolyprice,apricethatisconstrainedonlybythedemandforandthecostofproducinglicenseplates.Thelogicoftheexampledoesdictatethatlicenseplateswillbepurchasedfromonefirmbecausethiswillallowthatfirmtooffertheplatesatapricebasedonthelowestpossibleper-unitcost.Butwhyshouldthatpricebeamonopolyprice?

Therecanbemanybiddersfortheannualcontract.Eachwillsubmitabidbasedontheassumptionthatifitsbidislowestitwillselltoallresidents,ifitisnotlowestitsellstonone.Undertheseconditionstherewillexistenoughindependentlyactingbidderstoassurethatthewinningpricewilldifferinsignificantlyfromtheper-unitcostofproducinglicenseplates.

Ifonlyonefirmsubmitsthelowestprice,theprocessends,butiftwoormorefirmssubmitthelowestprice,oneisselectedaccordingtosomerandomselectiondeviceoroneisallowedtosellorgivehiscontractstotheother.Thereisnomonopolypricealthoughtheremayberenttosomefactorsiftheirsupplyispositivelysloped.Thereisnoregulationoffirmsintheindustry.Thepriceisdeterminedinthebiddingmarket.Theonlyroleplayedbythegovernmentorbyaconsumers,buyingcooperativeissomerandomdevicetoselectthewinningbidderifmorethanonebidderbidsthelowestprice.

Thereareonlytwoimportantassumptions:

（1）Theinputsrequiredtoenterproductionmustbeavailabletomanypotentialbiddersatpricesdeterminedinopenmarkets.Thislendscredibilitytonumerousrivalbids.

（2）Thecostofcolludingbybiddingrivalsmustbeprohibitivelyhigh.Thereaderwillrecognizethattheserequirementsarenodifferentthanthoserequiredtoavoidmonopolypriceinanymarket,whetherproductioninthatmarketisorisnotsubjecttoscaleeconomies.

Moreover,ifwearewillingtoconsiderthepossibilitythatcollusionormergerofallpotentialbiddingrivalsisareasonableprospect,thenwemustexaminetheothersideofthecoin.Whyshouldcollusionormergerofbuyersbeprohibitivelycostlyifaninfiniteorlargenumberofbiddingrivalscancolludesuccessfully?

Ifweallowbuyersaccesstothesametechnologyofcollusion,themarketwillbecharacterizedbybilateralnegotiationsbetweenorganizedbuyersandorganizedsellers.Whiletheoutcomeofsuchnegotiationsissomewhatuncertainwithrespecttowealthdistribution,thereisnoreasontoexpectinefficiency.

Justwhatisthesupplyelasticityofbiddersandwhatarethecostsofcolludingarequestionstobeansweredempiricallysincetheycannotbededucedfromproductionscaleeconomies.Thereexistmorethanonefirmineverypublicutilityindustryandmanyfirmsexistinsomepublicutilityindustries.Andthisistrueeventhoughlicensingrestrictionshavebeensevere;

theassertionthatthesupplyofpotentialbiddersinanymarketwouldbeveryinelasticiflicensingrestrictionscouldbeabolishedwouldseemdifficulttodefendwhenproducingcompetitorsexistinnearbymarkets.Thepresenceofactiverivalry