The Effects of Rivalry with Price Regulation of Electric Power Generation

This article examines how rivalry between an electric utility and nonutility generators (NUGs) affects electricity prices, market structure and welfare. If a utility cannot break even financially when outputs are priced at marginal cost, then the Ramsey optimal price paid by a utility purchasing electricity from a NUG should be below avoided cost, in contrast to the requirements of PURPA. The analysis also compares FDC, Residual and Ramsey prices for a utilitys electricity sales. It illustrates how FDC prices may force a utility to exit relatively competitive business markets, eliminating any benefits of economies of scope from serving both business and residential customers.     

The role of technological and market structure in regulatory reform

This article considers the role of technological and market structure in determining whether regulatory reform is desirable, and the nature of reform that might be undertaken to improve resource allocation. The article discusses the basis for government intervention in an industry, the role of natural monopoly, and alternative approaches that might be employed to introduce competition for a market even if competition within a market is not possible (e.g., through competitive auctions, contestability, or monopolistic competition). It suggests the nature of the economic basis for regulatory reform in a number of American industries in recent years.The author would like to thank George Kaufman, George Benston, and Randy Eberts for their helpful comments.     

Salience and choice: Neural correlates of shopping decisions

Noninvasive brain imaging was used to observe 18 subjects, each making 90 choices of three brands on a virtual (video) supermarket visit. Package height provided a control for the main experiment. Brain activations in brand choice differed from those for height discrimination, and choice times were faster when one brand was more familiar. Brand choice appeared to involve silent vocalization. Decision processes took approximately 1 s and can be seen as two halves. The first period seems to involve problem recognition and here male brain patterns differed from female. The second half concerned the choice itself. No male/female differences were observed but a different pattern was evoked where one brand was familiar and the other two were not. The right parietal cortex was strongly activated in this case. This research pioneers new techniques using relatively few subjects and against a limited theoretical background. As such it must be classified as exploratory. © 2004 Wiley Periodicals, Inc.