Optimal Regulation: The Economic Theory of Natural Monopoly [Hardcover]

Kenneth Train (Author)

Book Description

Publication Date: August 12, 1991

Optimal Regulation addresses the central issue of regulatory economics - how to regulate firms in a way that induces them to produce and price "optimally." It synthesizes the major findings of an extensive theoretical literature on what constitutes optimality in various situations and which regulatory mechanisms can be used to achieve it. It is the first text to provide a unified, modern, and nontechnical treatment of the field.The book includes models for regulating optimal output, tariffs, and surplus subsidy schemes, and presents all of the material graphically, with clear explanations of often highly technical topics.Kenneth E. Train is Associate Adjunct Professor in the Department of Economics and Graduate School of Public Policy at the University of California, Berkeley. He is also Principal of the firm Cambridge Systematics.Topics include: The cost structure of natural monopoly (economies of scale and scope). Characterization of firstand second-best optimality. Surplus subsidy schemes for attaining first-best optimality. Ramsey prices and the Vogelsang-Finsinger mechanism for attaining them. Time-ofuse (TOU) prices and Riordan's mechanisms for attaining the optimal TOU prices' Multipart and self-selecting tariffs, and Sibley's method for using self-selecting tariffs to achieve optimality. The Averch-Johnson model of how rate-of-return regulation induces inefficiencies. Analysis of regulation based on the firm's return on Output, costs, or sales. Price-cap regulation. Regulatory treatment of uncertainty and its impact on the firm's behavior. Methods of attaining optimality without direct regulation (contestability, auctioning the monopoly franchise.)

Editorial Reviews

Review

"A synthesis of twenty years of theory on the regulation of natural monopoly presented with exceptional clarity." Elizabeth E. Bailey , The Wharton School of the University of Pennsylvania

About the Author

Kenneth E. Train is Associate Adjunct Professor in the Department of Economics and Graduate School of Public Policy at the University of California, Berkeley. He is also Principal of the firm Cambridge Systematics.

Product Details

• Hardcover: 338 pages
• Publisher: The MIT Press (August 12, 1991)
• Language: English
• ISBN-10: 0262200848
• ISBN-13: 978-0262200844
• Product Dimensions: 9.2 x 6.3 x 1 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (1 customer review)
• Amazon Best Sellers Rank: #1,307,374 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

5 of 5 people found the following review helpful:

4.0 out of 5 stars Good starter for the field, February 3, 2001

By A Customer

This review is from: Optimal Regulation: The Economic Theory of Natural Monopoly (Hardcover)

This is one of the very few textbooks on Natural Monopoly Regulation. The level of presentation is undergraduate, which also means virtually no mathematics. It covers the basics quite well and may be considered as a good starter for the field. The book is full of illustrations that facilitate learning. Contrary to volumes written with the old descrirptive approach, this book teaches the student to think in terms of economic modelling.