THE MORAl OF THE STORY

THE MORAl OF THE STORY Like any parable, the story of Readalot Publishing is stylized. Yet also-like any parable. it teachs some important and general lessons. In this case, there are three lessons to be teamed ‘about price discrimination. The first and most...

In The News

In The News Public Transport and Private Enterprise In many cities, the mass transit system of buses and subways is a monopoly run by the local government. But is this the best system? Man with’aVan Vincent Cummings looks out from his van with the wary eyes of a...

A PARABLE ABOUT PRICING

A PARABLE ABOUT PRICING To understand why a monopolist would want to price discriminate, let’s consider a simple example. Imagine that you are the president of Readout Publishing Company. Readout’s best-selling author has just written her latest novel. To...

PRICE DISCRIMINATION

PRICE DISCRIMINATION So far, we have been assuming that the monopoly firm charges the same price to all customers. Yet in many cases, firms try to sell the same good to different customers for different prices, even thong» the costs of producing for the two customers...

DOING NOTHING

DOING NOTHING Each of the foregoing policies a~ed at. reducing the problem of monopoly has drawbacks. As a result, some economists argue that it is often .best for the government not to try to remedy the inefficiencies of monopoly pricing. Here is the assessment of...

PUBLIC OWNERSHIP

PUBLIC OWNERSHIP The third policy used by the government to deal with monopoly is public ownership. That is, rather than regulating a.natural monopoly that is run by a private form, the government can run the monopoly itself. This solution is common in many European...