The Great Divorce - Ownership and Management

912628

11/1/1991

Authors
Abstract
Content
Orthodox economic analysis indeed demonstrates that, where a good has a marginal cost that is insensitive to volume, only a monopoly is stable.
However, the further postulate animating public managements today, that a monopoly can increase its profits by holding the good off the market, is implausible with respect to a good that is perfectly perishable, e.g. the opportunity to traverse a highway. Thus a publicly-owned system may not, as is commonly supposed, be tolerant of bad management. In truth, the highway is sensitive to overloading: below the minimum speed, the flow is unstable. Therefore “fine tuning” of supply and demand is appropriate.
The assumption that public ownership demands public management is, then, to be rejected. It is shown that the public can let the management of the highway out to a profit-seeking concessionaire, who could be relied upon to raise charges sufficiently to prevent over-loading, without any risk of the capital assets being degraded.
Details
Citation
Firth, B., "The Great Divorce - Ownership and Management," International Pacific Conference On Automotive Engineering, , .
Additional Details
Publisher
Published
11/1/1991
Product Code
912628
Content Type
Technical Paper
Language
English