Ramsey pricing with long run competition

William Miller ()
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William Miller: Postal Regulatory Commission

Economics Bulletin, 2007, vol. 12, issue 34, 1-5

Abstract: Ramsey pricing of regulated firm services is often considered impractical because of stringent informational requirements. However in cases where demands for regulated firm services are independent and a marginal cost pricing competitive fringe exists, the simple inverse elasticity rule for Ramsey pricing has been shown to apply. This paper extends this result to show that only limited demand elasticity data for the regulated firm is required to apply the same rule, more generally, when zero profits and constant prices exist in the competitive sector in the long run.

JEL-codes: L5 (search for similar items in EconPapers)
Date: 2007-12-14
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