Private prices

In the market for energy, the main causes of divergence between private and social prices are the regulation of natural gas prices, the existence of a social cost associated with U.S. dependence on imports of foreign oil not reflected in private prices, and the existence of environmental externalities such as pollution or risk of a major accident such as nuclear leakage. 

The private price projections used are those implied by the National Energy Plan of 1977 as expressed in various DOE reports. The social prices were derived from the private prices by correcting for taxes and subsidies and by adding pollution and foreign dependence costs where appropriate. The homeowner s real opportunity cost of capital was 1% and the real social opportunity of capital was 8%, Table I shows the public benefits of the solar technology with and without the storage R D activity for each time period. The present value of the total benefits of the storage R D activity under these circumstances is S. 7 billion. 

The rapid development of the computer technique and the decreasing prices in spite of the increasing of performance have spread the use of personal computers (PCs) not only for industrial use but also for private use. Also, in spite of increasing requirements mea.surement and test systems become more and more economical, including NDT-systems. 

In addition to References 11 and 12, price and volume information concerning polyamides can be found in various pubflc sources (14) and private databases that requite a cHent fee for access (15). 

The production of steel is of great importance in most countries because modem civilization depends heavily on steel, the raw material for many industries. As a result, most countries have an active steel industry, which at one time was heavily subsidized but as of this writing is increasingly privatized. The world trade in steel was frequently a source of hard currency where the United States was the main contributor. Trade is much more at market prices that reflect the real cost of production. Under these conditions, the United States in its own market is very often the low cost producer following massive cost reduction in the 1980s. The United States can export a few million tons per year at a profit. 

Paradoxically, even rapid lowering of demand may cause rapid cost escalation this was the case in New Jersey during a 1981 drought when conservation caused substantial shrinking of demand and private water companies had to double their water prices. The continued increase of demand and reduction of supply portend real and relendess water-cost increases in every part of the United States in the future. One possible way to assure at least adequate suppHes, and possibly to moderate these cost increases, is through water reuse. 

Because dealings in the stock of a hsted company are published, a healthy company engenders confidence that makes it easier to obtain other forms of finance. In the absence of a regular market, stock transactions are necessarily infrequent, and prices are liable to wide fluctuation, which may make creditors wary and possibly lead to bankruptcy proceedings. Such deahngs are usually referred to as over-the-counter and are confined to the relatively few specialist brokers who hold inventories of such stock and are prepared to make a market in them or are hmited to private transactions. 

As the size of markets have increased and the optimal size of electricity generation units have decreased more electricity markets are being privatized and restructured to allow more competition into the markets and less government control over pricing. 

According to J. M. Griffin and H. B. Steele (1986), external costs exist when the private calculation of costs differs from society s valuation of costs. Pollution represents an external cost because damages associated with it are borne by society as a whole, not just by the users of a particular fuel. Pollution causes external costs to the extent that the damages inflicted by the pollutant are not incorporated into the price of the fuel associated with the damages. External costs can be caused by air pollution, water pollution, toxic wastes, or any other damage to the environment not included in market prices for goods. 

Social costs reflect in this example all costs occurring from the provision and the use of transport infrastructure, such as wear and tear costs of infrastructure, capital costs, congestion costs, accident costs and environmental damage costs. Some of these costs are already indirectly included in the private costs through taxes and charges, while others are not. In the context of environmental economics, private and social aspects are of importance. Mainly since it is often the case that environmental degradation is a social cost caused by private activities. Hence, the distinction between private and social is as presented above another impact of costs not being properly internalized in prices. 

The revealed preference method is an indirect approach that is used in order to monetize use values. This method observes the real choice between money and the environmental goods. Methods often include observations of consumers or producers behaviour or actions, such as the hedonic price method and the production function method. The hedonic price method determines values from actual market transactions. These transactions are used to see how the price of a market commodity varies when a related environmental good changes, such as the effects of noise or air pollution on house prices. The production function method is used to estimate the value of the environmental effects on production. This method is suitable when consumption or production of a private good is affected by the environmental good. An example is the valuation of ground-level ozone levels by valuing the impact on the production of wheat or timber, which has market prices. The problem with the revealed preference method is that it does not contain all the individuals values that affect the WTP. 

Kremer proposes sealed-envelope tenders in which the successful bidder is the one offering the second highest price, as this mechanism would best show the bidders preferences. A great number of key details come into play in order for the mechanism to work correcdy, all of which are clearly set out in the article. Issues such as the relationship between substitutes and complements with a patent in private hands, the interrelation with existing patent holders, the size of the margin to pay above the private value, and how to avoid collusion, are also dealt with in the article. 

PCR regulation does not restrict the price of new products, so the initial price of the product introduced onto the market will be higher than in the absence of regulation. In the simulation carried out by Abbott19 the initial price can be seen to be higher under PCR than with free pricing in the first years. The effect on welfare is very sensitive to the social and private discount rate. 

Sargent, J.A. (1987), The politics of the pharmaceutical price regulation scheme , in W. Streek and PC. Schmitter (eds), Private Interest Government Beyond Market and State, London Sage. 

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