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Within a simple model of homogeneous oligopoly, we show that the traditional ranking between Bertrand and Cournot equilibria may be reversed. For price setting entails a continuum of price equilibria under convex variable costs, departure from marginal cost pricing may be observed. As a consequence, Bertrand-Nash equilibrium profits (welfare) may be higher (lower) than Cournot-Nash ones. The reversal of the standard rankings occurs when pricing strategies mimic collusive behaviour.

Fixed and Marginal Costs in Electricity Markets lays out clear cost methodologies for understanding marginal price structures, further cementing electricity's role as an asset class with fixed and variable costs. This work presents a global recasting of electricity market design and will be of direct use to practitioners, academics, commentators, planners, and policy makers in electricity. Harris places electricity firmly in the canon of the microeconomics and econo-engineering of costs, from bridges to broadband infrastructure. His findings and research offer a fresh alternative to prevailing policies and regulations.

Car purchase taxes in The Netherlands are among the highest in the EU. The Dutch government plans to gradually replace car purchase and ownership taxes by a national road user charging system (kilometre charge) in the period 2012 to 2016. As a result, new and second hand car prices in the Netherlands will drop up to 30%. Relatively little research has been conducted on the impacts of such large price changes on car ownership. Reduced car prices are likely to lead to an increase in car ownership. But consumers could also refrain from buying extra cars when they consider the extra operating costs resulting from the kilometre charge. This paper presents one of the few empirical studies to examine the effects of both (large) fixed and variable car cost changes on both car ownership and use. An internet survey among Dutch households was designed and conducted including stated intentions and stated preference experiments. We investigated whether households react more to present one-off fixed costs than to recurrent variable costs, for various specifications of car costs. Model analysis was conducted to derive fixed and variable price elasticities for private car ownership and effects of the kilometre charge. The study shows in their car purchase decisions, households react more strongly to a change in euro per year in fixed car costs than to a euro per year in variable car costs. Abolishing the Dutch car purchase tax while at the same time introducing a kilometre charge will lead to 2% rise in car ownership on the short to medium run (1-5 years).

Focuses on critical issues related to variable cost drivers essential in establishing criteria or parameters to consider in the modification and/or design of production facilities. Key concepts and relationships influence the choice of alternative technologies and methods in the design, upgrading, modification, or expansion of manufacturing and process facilities. Cost relationships are important in evaluating whether to retain an existing facility or, alternatively, scrap the assets and "start over". For brevity, focus is restriced to decisions concerning overhaul, modification, upgrade, expansion, abandonment, and fresh investment as "design".

Under an Act of 1926, a 'public interest' corporation, the CEB, was empowered to build a national transmission grid and rationalize UK electricity generation. A constrained cost model estimates the gains from this re‐regulation of the electricity generating industry. The new regime reduced costs by one‐third, radically improving the utilization of capital and boosting the average scale of operations. It did so by persuading private and municipal enterprises to accept central direction of the extent and timing of their electricity generation. This voluntarism saved on enforcement costs, but perhaps one‐half of the industry cost reduction the CEB actually achieved by 1937 was apparently forgone.

The purpose of this paper is to analyze the European Commission's approach to state aid for foreign direct investment in a competition policy framework. The Commission shows to consider variable cost aid (VCA) to be more distortive than start-up or fixed cost aid (FCA). This paper addresses that issue and checks whether allowing FCA while banning VCA is a …first-best strategy for a rational Authority maximizing welfare. The model shows that a rational forward-looking government maximizing domestic welfare always prefers VCA to FCA if both the incumbent and the entrant are foreign firms and if granting VCA does not cause to the incumbent …firm to exit the market. On the other hand, a VCA which causes the incumbent …firm to be crowded out by the entrant never occurs at the equilibrium. The model shows that the Commission's approach may lead to sub-optimal equilibria where market competition and consumers' welfare are not maximized.