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I'm not sure where to start with this article. Ok, how about here: there is no necessary connection between costs and prices, at all, and this is why some busi
by samatman 5y ago
I'm not sure where to start with this article.
Ok, how about here: there is no necessary connection between costs and prices, at all, and this is why some businesses go broke and others are worth a trillion dollars.
Starting completely over with the basic microeconomics correct, there's surely an interesting question about public utilities which are paying prices for electricity which no longer line up with amortization and other costs of provision to be answered.
Everything said about clubs was not-even-wrong, though.
- bo1024 5y agoPossibly right but in an ideal world for maximum welfare, prices should signal costs or externalities.
- zopa 5y agoThat's a nice emergent feature that happens when you have plenty of competition, low transaction costs, perfect information and so on. Sometimes the real world is close enough to that one that you can pretend prices and costs are the same (although even then, just marginal costs, which doesn't include infrastructure that's already built). But it shouldn't be even mildly surprising when they diverge; it's certainly not a lie.
- ballenf 5y agoBut isn't the idea of a "utility" that it operates as a unique type of company that prices its services in sync with costs? In fact many utilities are explicitly cooperatives. To me, "privatized utility" is an oxymoron and that point is just a company with a mandated or de facto monopoly.