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Rate-of-return Regulation
Rate-of-return regulation (also cost-based regulation) is a system for setting the prices charged by government-regulated monopolies, such as public utilities. It attempts to set prices at efficient (non-monopolistic, competitive) levels equal to the efficient costs of production, plus a government-permitted rate of return on capital. Rate-of-return regulation has been criticized because it encourages cost-padding and because if the rate is set too high, it encourages regulated firms to adopt capital-labor ratios that are too high. That is known as the Averch–Johnson effect, or simply "gold-plating." Under rate-of-return regulation, regulated monopolies have no incentive to minimize their capital purchases, since prices are set equal to their costs of production. Rate-of-return regulation was dominant in the US for a number of years in the government regulation of utility companies and other natural monopolies. Such companies, if not regulated, could easily charge far higher ra ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Public Utility
A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and regulation ranging from local community-based groups to statewide government monopolies. Public utilities are meant to supply goods and services that are considered essential; water, gas, electricity, telephone, waste disposal, and other communication systems represent much of the public utility market. The transmission lines used in the transportation of electricity, or natural gas pipelines, have natural monopoly characteristics. A monopoly can occur when it finds the best way to minimize its costs through economies of scale to the point where other companies cannot compete with it. For example, if many companies are already offering electricity, the additional installation of a power plant will only disadvantage the consumer ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Averch–Johnson Effect
The Averch–Johnson effect is the tendency of regulated companies to engage in excessive amounts of capital accumulation in order to expand the volume of their profits. If companies' profits to capital ratio is regulated at a certain percentage then there is a strong incentive for companies to over-invest in order to increase profits overall. This investment goes beyond any optimal efficiency point for capital that the company may have calculated as higher profit is almost always desired over and above efficiency. Excessive capital accumulation under rate-of-return regulation is informally known as gold plating. But the so-called Averch-Johnson effect of overcapitalization does not as a general case involve "gold-plating". Mathematical derivation Suppose that a regulated firm wishes to maximize its profit:\pi = R(K,L) - wL - rKwhere R(K,L) is the revenue function, K is the firm's capital stock, L is the firm's labor stock, w is the wage rate, and r is the cost of capital. The ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Standard Oil
Standard Oil Company was a Trust (business), corporate trust in the petroleum industry that existed from 1882 to 1911. The origins of the trust lay in the operations of the Standard Oil of Ohio, Standard Oil Company (Ohio), which had been founded in 1870 by John D. Rockefeller. The trust was born on January 2, 1882, when a group of 41 investors signed the Standard Oil Trust Agreement, which pooled their securities of 40 companies into a single holding agency managed by nine trustees. The original trust was valued at $70 million. On March 21, 1892, the Standard Oil Trust was dissolved and its holdings were reorganized into 20 independent companies that formed an unofficial union referred to as "Standard Oil Interests." In 1899, the ExxonMobil, Standard Oil Company (New Jersey) acquired the shares of the other 19 companies and became the holding company for the trust. Jersey Standard operated a near monopoly in the American oil industry from 1899 until 1911 and was the largest corp ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Capital Accumulation
Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form of profit, rent, interest, royalties or capital gains. The goal of accumulation of capital is to create new fixed capital and working capital, broaden and modernize the existing ones, grow the material basis of social-cultural activities, as well as constituting the necessary resource for reserve and insurance. The process of capital accumulation forms the basis of capitalism, and is one of the defining characteristics of a capitalist economic system.''Capital'', Encyclopedia on Marxists.org: http://marxists.org/glossary/terms/c/a.htm#capital Definition In economics and accounting, capital accumulation is often equated with investment of profit income or savings, especially in real capital goods. The concentration and centralisa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
United States Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that turn on questions of U.S. constitutional or federal law. It also has original jurisdiction over a narrow range of cases, specifically "all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party." In 1803, the Court asserted itself the power of judicial review, the ability to invalidate a statute for violating a provision of the Constitution via the landmark case '' Marbury v. Madison''. It is also able to strike down presidential directives for violating either the Constitution or statutory law. Under Article Three of the United States Constitution, the composition and procedures of the Supreme Court were originally established by the 1st Congress through the Judiciary Act of 1789. As it has si ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Munn V
Munn as a surname may refer to: * Allison Munn (born 1974), American actress * Biggie Munn (1908–1975), college football player and coach * Geoffrey Munn (born 1953), jewellery expert on the BBC's Antiques Roadshow * Gurnee Munn (died 1960), American businessman * Henry Munn (1835–1864), English cricketer and officer in the British Army * Jack Munn, Australian rugby player * John Munn (other), several people * Kathleen Munn (1887–1974), Canadian artist * Louise Munn (born 1983), Scottish hockey player * Mancel Thornton Munn (1887–1956), American agronomist and botanist * Mark Munn (born 1953), American ancient historian * Meg Munn (born 1959), British politician * Olivia Munn (born 1980), American actress and TV personality * Orson Desaix Munn, (1824-1907), publisher of ''Scientific American'' * Robert Stewart Munn (1829–1894), Newfoundland merchant and politician * Robert Edward Munn (1919–2013), Canadian climatologist and meteorologist * Sigurd Munn, epithet ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Natural Monopoly
A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors. Specifically, an industry is a natural monopoly if the total cost of one firm, producing the total output, is lower than the total cost of two or more firms producing the entire production. In that case, it is very probable that a company (monopoly) or minimal number of companies (oligopoly) will form, providing all or most relevant products and/or services. This frequently occurs in industries where capital costs predominate, creating large economies of scale about the size of the market; examples include public utilities such as water services, electricity, telecommunications, mail, etc. Natural monopolies were recognized as potential sources of market failure as early as the 19th century; John Stua ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Smyth V
Smyth is an early variant of the common surname Smith commonly found in Ireland.Citation: Bardsley, 1901 Shown below are notable people who share the surname "Smyth". Notable people sharing the Smyth surname Listed here are people who share the 'Smyth' surname, organized by birth year. Families * Smyth baronets, several independently created British hereditary titles * Bowyer-Smyth baronets, holders of a single British hereditary title Smyth disambiguation pages * John Smyth (other) * Joseph Smyth (other) * Peter Smyth (other) * Richard Smyth (other) * William Smyth (other) Notes Other uses * Smyth County, Virginia * Smyth (restaurant) - a restaurant in Chicago References * See also * Smith (other) Smith may refer to: People and fictional characters * Metalsmith, or simply smith, a craftsman fashioning tools or works of art out of various metals * Smith (given name) * Smith (surname), a family ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Price-cap Regulation
Price-cap regulation is a form of incentive regulation capping the prices that firms in a natural monopoly position may charge their customers. Designed in the 1980s by UK Treasury economist Stephen Littlechild, it has been applied to all privatised British network utilities. It is contrasted with both rate-of-return regulation, with utilities being permitted a set rate of return on capital, and with revenue-cap regulation, with total revenue being the regulated variable. Functioning Price-cap regulation adjusts the operator's prices according to * the price cap index that reflects the overall rate of inflation in the economy, * the ability of the operator to gain efficiencies relative to the average firm in the economy, and * the inflation in the operator's input prices relative to the average firm in the economy. Revenue cap regulation attempts to do the same thing but for revenue, rather than prices. [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Revenue-cap Regulation
Revenue-cap regulation allows the operator to change its prices within baskets of services so long as the change in revenue does not exceed the revenue cap index. This index typically reflects the overall rate of inflation in the economy, the inflation in the operator's input prices relative to the average firm in the economy and the ability of the operator to gain efficiencies relative to the average firm in the economy. Price-cap regulation Price-cap regulation is a form of incentive regulation capping the prices that firms in a natural monopoly position may charge their customers. Designed in the 1980s by UK Treasury economist Stephen Littlechild, it has been applied to all privati ... attempts to do the same thing but for prices, rather than revenue. The system is intended to provide incentives for efficiency savings, as any savings above the productivity factor (this predicted rate of efficiency is commonly called the X-factor) can be passed on to shareholders, at least unti ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Monopoly (economics)
A monopoly (from Greek and ) is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by a lack of economic competition to produce a particular thing, a lack of viable substitute goods, and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit. The verb ''monopolise'' or ''monopolize'' refers to the ''process'' by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices, which is associated with unfair price raises. Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market). A monopoly may also have monopsony control of a sector of a market. A mono ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
