The budget deficit equivalent to total government spending tax minus total government spending income tax independently, but depend on the net income, The relevance of seaports in the efficient working of an economy cannot be understated since all goods and passengers transported by sea require the use of, at least, two ports. In the majority of countries, most international trade (export/import), and in some cases also large shares of domestic trade, is done through maritime transport. For long-haul shipments, there are no alternative transport modes to ships, with the exception of high- value and small volume cargoes, for which air transport offers speed as its advantage | Chapter 19 Privatization and regulation David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 6th Edition, McGraw-Hill, 2000 Power Point presentation by Peter Smith Nationalization and privatization Nationalization the acquisition of private companies by the public sector Privatization the return of state enterprises to private ownership and control 19. The firm makes profits as shown. Natural monopoly occurs when there is an industry with such economies of scale relative to market demand that only one firm can survive. DD LMC LAC MR Quantity Price Qm Pm The monopoly would produce where MC=MR, with output Qm and price Pm. Q' Pc From society's point of view the optimum position is at PcQ', where MSB = MC. but the monopoly would make a loss if forced to produce at this point, with LAC > AR. 19. See Section 19-1 of the main text, and Figure 19-1. (2) Two-part tariff: Firm makes a fixed charge to cover the loss made by producing at Q' (the pink rectangle), and a variable . | Chapter 19 Privatization and regulation David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 6th Edition, McGraw-Hill, 2000 Power Point presentation by Peter Smith Nationalization and privatization Nationalization the acquisition of private companies by the public sector Privatization the return of state enterprises to private ownership and control 19. The firm makes profits as shown. Natural monopoly occurs when there is an industry with such economies of scale relative to market demand that only one firm can survive. DD LMC LAC MR Quantity Price Qm Pm The monopoly would produce where MC=MR, with output Qm and price Pm. Q' Pc From society's point of view the optimum position is at PcQ', where MSB = MC. but the monopoly would make a loss if forced to produce at this point, with LAC > AR. 19. See Section 19-1 of the main text, and Figure 19-1. (2) Two-part tariff: Firm makes a fixed charge to cover the loss made by producing at Q' (the pink rectangle), and a variable charge related to marginal cost. (1) Average cost pricing: Firm sets P=LAC at point G; deadweight loss reduced to GHE. G H Natural monopoly (2) DD LMC LAC MR Quantity Price Q' Pc Alternative pricing policies: E 19. See Section 19-1 of the main text, and Figure 19-1 Notice also that two-part tariff pricing was also discussed in \chapter 11 in the context of "the information economy". Nationalization Another possibility is to nationalize the industry and provide a subsidy to cover the loss as was popular in Europe in 1945-80 If nationalized industries make losses, this does not prove they are failing to minimize costs or produce at the socially efficient output but incentives may be a problem. 19. This in discussed in Section 19-1 of the main text. Reasons for nationalization Natural monopoly Externalities . subsidizing public transport (London Underground) may be a second-best option to road pricing. Equity or distributional consequences . protecting transport in rural .
