The welfare effects of third-degree price discrimination are known to be negative when demand functions are linear, marginal cost is constant and all markets are served. This paper shows that discrimination lowers welfare for a more general class of demand functions. Demand varies across markets...

The regulator of a natural monopoly that sets a two-part tariff and whose marginal cost is stochastic will generally want the price to vary less than marginal cost when the lump-sum charge in the tariff is fixed. A trade-off exists between efficient pricing and an optimal allocation of risk....

This paper presents simple conditions for monopoly third-degree price discrimination to have negative or positive effects on aggregate consumer surplus.  Consumer surplus is often reduced by discrimination, for example when total welfare (consumer surplus and profits) falls.  Surplus increases...

The paper shows how commodity taxes can provide insurance to consumers when the producer price is volatile. Specific and ad valorem taxes have differing roles. The optimal specific tax is positive when demand has some elasticity. The optimal ad valorem rate is zero when demand is unit-elastic,...

Sufficient conditions are developed for third-degree price discrimination by a monopolist serving all markets to reduce and raise social welfare.  Welfare falls if the demand function in the market whose price is higher with discrimination is at least as convex as that in the other market (at...

The paper assesses the welfare effects of different ways of allocating input price risk between a regulated utility, consumers and speculators in a futures market. A risk-averse utility setting a fixed retail price requires a price that exceeds expected marginal cost, unless an efficient futures...

The effects of demand shifts on output, price and profits in imperfectly competitive industries with no entry or exit are derived. Four types of demand shift are modelled: additive and multiplicative shifts of the demand and inverse demand functions. Necessary and sufficient conditions for...

We develop a new automatically-computable test for super exogeneity, using a variant of general-to-specific modeling.  Based on the recent developments of impulse saturation applied to marginal models under the null that no impulses matter, we select the significant impulses for testing in the...

In von Neumann and Morgenstern's sample model of poker, equilibrium has the first player bet with high and low hands, and check with intermediate hands.  The second player then calls if his hand is sufficiently high.  Betting by the low hands is interpreted as bluffing, and is a pure...

Models of macroeconomic learning are populated by agents who possess a great deal of knowledge of the "true" structure of the economy, and yet ignore the impact of their own learning on that structure; they may learn about an equilibrium, but they do not learn within it.  An alternative learning...