This paper shows that Peltzman's theory of regulation is ineffective: no monopolist will follow his order to lower price and increase output. Faced with lower price, monopolists will only reduce their output. Consumers' surplus may not increase either. When those unsatisfied consumers have to...

This paper proves that when a firm has paid pollution tax, it will not clean its pollution any more. Conversely, it proves that when a firm has cleaned up its pollution, it should be exempted from pollution and profit tax. This paper also proves that for pollution tax to be effective, it has to...

This paper offers a historical account of competition theories in economics. It shows that most, if not all, of these theories do not offer winning strategy. It encourages students of economics to search for new, definite but honest winning strategy in competition

Nash (1951) claimed that every game must have a solution, even if it means a mixed strategy. His method is to find a probability that equalizes the two expected payoffs. Though simple, the calculation can be tedious. To avoid unnecessary mistake, this paper works out an algorithm to do the...

This paper disproves the U-shaped production theory, in particular, the U-shaped average cost curve. When fixed cost is introduced into the originally variable-cost production, the average cost curve changes into the U-shape, but its decreasing part means loss, where no rational firm will...

This paper attempts to fulfill three missions: (i) To make the law of large numbers a theory; (ii) To explain the business of casinos and insurance companies; (iii) To expel moral hazard. The law of large numbers, though well established in statistics, is widely ignored in economics. While...

This paper shows that Stackelberg has turned the Cournot competitors into monopolists, to result in Bertrand's equilibrium, and to fall into a prisoner's dilemma. This paper then applies Hotelling's theory to break the dilemma

This paper proves that Becker and Stigler's attempt to explain addiction is unsuccessful. Income or wealth may affect consumption, but they cannot be used to represent addiction. Wage rate may shift the budget line, but equilibrium requires a given wage rate or income. Addiction is a...

This paper points out two fundamental mistakes committed by Arnott and Stiglitz: their formulation of expected utility is a single point, and their introduction of the effort parameter is detrimental. The first mistake destroys their hope to retrieve an indifference curve. The second mistake...

This paper changes the current view of tariff. It advocates taxing the exporters, rather than the importers. The new theory is based on the symmetry theorem developed earlier by Lerner. Taxing the exporters has all the same effects as taxing the importers with tariff, except that the former...