Contrary to conventional wisdom, a regulated natural monopoly may be vulnerable to entry by uninnovative competitors even if it is producing and pricing efficiently and earning zero economic profits. The causes and consequences of this unsustainability are theoretically examined in an idealized...

The well-known result that optimal peak load pricing requires only users who utilize plant to capacity to bear any fraction of the capacity costs is shown to result from the technological assumption of the traditional literature and not from the fundamental nature of the peak load problem. When...

Willig demonstrated that in a model in which user demands are independent, a uniform price greater than marginal cost can be Pareto dominated by a nonlinear outlay schedule. However, when users are firms of different sizes which compete in final product markets, their demands must be...