Optimal Pricing for Natural Monopoly

Page 1 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=1' data-page='1' class='cut-thumb lazyload' alt='Page 1: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/1.jpg' width='140' height='200' /> Optimal Pricing for Natural Monopoly

Page 2 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=2' data-page='2' class='cut-thumb lazyload' alt='Page 2: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/2.jpg' width='140' height='200' /> • Marginal Cost pricing implies losses and the need for subsidy

• Optimal second-best pricing (Ramsey Pricing)

Page 3 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=3' data-page='3' class='cut-thumb lazyload' alt='Page 3: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/3.jpg' width='140' height='200' /> Page 4 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=4' data-page='4' class='cut-thumb lazyload' alt='Page 4: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/4.jpg' width='140' height='200' /> Page 5 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=5' data-page='5' class='cut-thumb lazyload' alt='Page 5: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/5.jpg' width='140' height='200' /> Ramsey Pricing

Page 6 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=6' data-page='6' class='cut-thumb lazyload' alt='Page 6: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/6.jpg' width='140' height='200' /> 1 1 2 211 22

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Page 7 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=7' data-page='7' class='cut-thumb lazyload' alt='Page 7: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/7.jpg' width='140' height='200' /> Page 8 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=8' data-page='8' class='cut-thumb lazyload' alt='Page 8: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/8.jpg' width='140' height='200' /> Page 9 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=9' data-page='9' class='cut-thumb lazyload' alt='Page 9: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/9.jpg' width='140' height='200' /> Cross-Subsidization and Ramsey Pricing

• Stand-Alone Cost test (SAC)

( )i i ip q SAC q

Page 10 <img data-url='document/optimal-pricing-for-natural-monopoly.html?page=10' data-page='10' class='cut-thumb lazyload' alt='Page 10: Optimal Pricing for Natural Monopoly' loading='lazy' src='data:image/gif;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAADUlEQVR42mNk+P+/HgAFhAJ/wlseKgAAAABJRU5ErkJggg==' data-src='https://reader030.cupdf.com/reader030/viewer/2022033019/568132d5550346895d99990a/html5/thumbnails/10.jpg' width='140' height='200' /> The Incremental-Cost Test

( )i i i ip q IC q

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Optimal Pricing for Natural Monopoly

Documents

cost test sac

incrementalcost test

ramsey pricingstand