Economic Theory of Public Enterprise

1 Introduction.- 2 Theoretical foundations of allocation policy.- 1. Benefit-cost analysis and consumer surplus.- 2. Partial versus general microeconomic analysis.- 3. The quantitative importance of allocative efficiency.- 3 Marginal-cost pricing.- 1. Economic interpretation of marginal-cost pricing.- 2. Joint production, quality differentiation and peakload pricing.- 3. Zerotariffs as a special concept for allocation.- 4. Regulating marginal-cost prices.- 5. Consequeaces for allocation, distribution and stabilization.- 4 Welfare maximization under a revenue-cost constraint.- 1. Nonlinear and nonuniform pricing.- 2. Uniform pricing à la Ramsey.- 3. On the opportunity costs of financing deficits.- 4. Regulating Ramsey prices.- 5. Economic consequences of Ramsey prices and of two-part tariffs.- 5 Interdependencies with the private economy.- 1. Interdependencies caused by producers.- 2. Interdependencies caused by consumers.- 6 Non-allocational objectives.- 1. Description of different non-allocative objectives.- 2. The fundamental optimization problem 94.- 3. Economic interpretation of the results.- 4. Some remarks on other non-allocational objectives.- 7 Public-good pricing.- 1. Optimal prices for public goods 108.- 2. Some remarks on the applicability of public-good pricing.- 8 Conclusion: Welfare economics, business economics, and political economics.- 1. Business economics of public enterprises.- 2. Political economics of public enterprises.- Appendix Obtaining the Ramsey price structure from maximization of consumer surplus.- References.