Regulators of natural monopolies advocate inducing monopolies to maximize the sum of consumer and producer surplus to the extent possible. Although such maximization is efficient in partial equilibrium, its general equilibrium properties have not yet been fully explored. We study the welfare...

Our companion paper introduced a new general equilibrium concept, called PDME, in which a natural monopoly maximizes its industry's surplus. While PDME's are always efficient, decentralization and existence sometimes fail under increasing returns to scale. This paper derives conditions under...

This paper studies the extent to which qualitative features of Walrasian equilibria are refutable given a finite data set. In particular, we consider the hypothesis that the observed data are Walrasian equilibria in which each price vector is locally stable under tatonnement. Our main result...

The assumption that decision makers choose actions to maximize their preferences is a central tenet in economics. This assumption is often justified either formally or informally by appealing to evolutionary arguments. In contrast, this paper shows that in almost every game, payoff. maximization...