This analysis extends the work of William Baumol and David Bradford, on efficient pricing with a multiproduct monopoly, to include the case of intermodal competition. A set of rules is developed, showing how second best processes deviate from marginal cost when economics of scale are present. The paper shows why these rules may be difficult to implement in some cases, with a direct application to surface freight transport and then suggests a variation in the theory of second best that may be useful given those difficulties.

This paper reexamines a much-studied topic, the effects of surface freight regulation. It demonstrates that several studies use invalid methods to estimate the welfare costs of rate regulation, develops a correct procedure, and provides estimates of the welfare effects using data and modal market share relationships estimated by Boyer. The paper also analyzes some implications of the common assumption that the demand for total freight shipments by all modes is perfectly inelastic.

This article focuses on the use of incentive regulation in the telephone industry in the United States. We first characterize some of the difficulties that have led regulators to move away from traditional rate-ofreturn (cost-based) regulation and toward systems of regulation that provide incentives for increasingly efficient production, allowing firms to share in the social gains from efficiency with increased profits. We then discuss the basic structure of incentive regulation as it has most commonly been adopted in the telephone industry in the United States. The first is price-cap (PC) regulation, which typically allows the firm to

Ronald R. Braeutigam, Andrew F. Daughety, Mark A. Turnquist, The Estimation of a Hybrid Cost Function for a Railroad Firm, The Review of Economics and Statistics, Vol. 64, No. 3 (Aug., 1982), pp. 394-404