On June 11, 2001, the Southern District Court of New York approved a Joint Motion by the U.S. Dep... more On June 11, 2001, the Southern District Court of New York approved a Joint Motion by the U.S. Department of Justice and ASCAP to enter a Second Amended Final Judgment (AFJ2) that vacates previous judgments. The new Consent Decree is generally a competitive improvement over its predecessor. With regard to licensing, rules are tightened in a manner that makes ASCAP's program license more competitive with its "all or nothing" blanket license; broadcasters and other users will now have more economic ability to substitute out of the blanket contract. This could save shareholders in the broadcast industry considerable amounts. With regard to writer payments, market adjustments and joint collective bargaining between writer groups and licensees will replace government rule-making as a means of valuing the relative worth of different types of music. Here the Decree may be too optimistic in its assessment of the health of competition in the market for performing rights and its ...
The author compares the model used by Khazzoom with that of Besen and Johnson to show that their ... more The author compares the model used by Khazzoom with that of Besen and Johnson to show that their conclusions differ because they organized the problem differently rather than whether or not more efficient appliances are more expensive. Khazzoon separates the capital cost of the appliance from the marginal cost of operation, while Bensen and Johnson combine energy costs and capital
As regulators continue to open utility markets to entry, new market contestants may specialize in... more As regulators continue to open utility markets to entry, new market contestants may specialize in providing service for the utility's largest customers. Consequently, old utility pricing procedures may no longer be sustainable. Taking telecommunications regulation as an example, this article develops optimal pricing strategies for utilities that have large customers who have other attractive service options. I demonstrate that under an optimal nonuniform price schedule, utilities can legitimately price high-level usage below its associated marginal usage cost. Furthermore, customers will make economically efficient choices when deciding whether to forego utility service.
The first half of this paper overviews traditional methods of ratemaking—embedded and marginal co... more The first half of this paper overviews traditional methods of ratemaking—embedded and marginal cost pricing—and four recent alternatives—automatic rate adjustments, profit-sharing, tariff menus, and the Vogelsang-Finsinger convergence mechanism—that have come to challenge them. We develop a list of nine desirable properties that are suitable to gauge any regulatory mechanism. In the second half of the paper, we explore in greater detail two recent incentive plans—the FCC's price caps approach and a mechanism that the three authors proposed in a FERC document. Based on the nine properties, these two mechanisms are compared.
Redistribution strategies that have been implemented to promote universal service in telecommunic... more Redistribution strategies that have been implemented to promote universal service in telecommunications subscriptions now face two problems. First, in order to avoid higher prices, customers have moved away from services that bear revenue-providing subsidies that are unrelated to cost. Second, certain subsidy strategies award dollars to recipient companies or end-users in a manner that may discourage efficient cost-management and/or customer choice. This paper considers some options for reform. Copyright 1995 by Oxford University Press.
On June 11, 2001, the Southern District Court of New York approved a Joint Motion by the U.S. Dep... more On June 11, 2001, the Southern District Court of New York approved a Joint Motion by the U.S. Department of Justice and ASCAP to enter a Second Amended Final Judgment (AFJ2) that vacates previous judgments. The new Consent Decree is generally a competitive improvement over its predecessor. With regard to licensing, rules are tightened in a manner that makes ASCAP's program license more competitive with its "all or nothing" blanket license; broadcasters and other users will now have more economic ability to substitute out of the blanket contract. This could save shareholders in the broadcast industry considerable amounts. With regard to writer payments, market adjustments and joint collective bargaining between writer groups and licensees will replace government rule-making as a means of valuing the relative worth of different types of music. Here the Decree may be too optimistic in its assessment of the health of competition in the market for performing rights and its ...
The author compares the model used by Khazzoom with that of Besen and Johnson to show that their ... more The author compares the model used by Khazzoom with that of Besen and Johnson to show that their conclusions differ because they organized the problem differently rather than whether or not more efficient appliances are more expensive. Khazzoon separates the capital cost of the appliance from the marginal cost of operation, while Bensen and Johnson combine energy costs and capital
As regulators continue to open utility markets to entry, new market contestants may specialize in... more As regulators continue to open utility markets to entry, new market contestants may specialize in providing service for the utility's largest customers. Consequently, old utility pricing procedures may no longer be sustainable. Taking telecommunications regulation as an example, this article develops optimal pricing strategies for utilities that have large customers who have other attractive service options. I demonstrate that under an optimal nonuniform price schedule, utilities can legitimately price high-level usage below its associated marginal usage cost. Furthermore, customers will make economically efficient choices when deciding whether to forego utility service.
The first half of this paper overviews traditional methods of ratemaking—embedded and marginal co... more The first half of this paper overviews traditional methods of ratemaking—embedded and marginal cost pricing—and four recent alternatives—automatic rate adjustments, profit-sharing, tariff menus, and the Vogelsang-Finsinger convergence mechanism—that have come to challenge them. We develop a list of nine desirable properties that are suitable to gauge any regulatory mechanism. In the second half of the paper, we explore in greater detail two recent incentive plans—the FCC's price caps approach and a mechanism that the three authors proposed in a FERC document. Based on the nine properties, these two mechanisms are compared.
Redistribution strategies that have been implemented to promote universal service in telecommunic... more Redistribution strategies that have been implemented to promote universal service in telecommunications subscriptions now face two problems. First, in order to avoid higher prices, customers have moved away from services that bear revenue-providing subsidies that are unrelated to cost. Second, certain subsidy strategies award dollars to recipient companies or end-users in a manner that may discourage efficient cost-management and/or customer choice. This paper considers some options for reform. Copyright 1995 by Oxford University Press.
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