Document Type
Article
Publication Date
1984
Abstract
The concept of natural monopoly is one of the most familiar in economics. Many supposed natural monopolies are the object of widespread state, local, and federal regulation. It was in addressing issues of public utility regulation that Demsetz laid the foundation for an alternative scenario for decreasing cost markets. Demsetz's article promoted a debate over whether a formal auction system might provide a practical approach to monopoly control. This literature is rich in examining the practical difficulties of implementing such an institution. The important characteristic of the contestable markets hypothesis, as we interpret it, is that at least two firms bid, in the sense of Demsetz, directly for buyer purchases.
Recommended Citation
Coursey, Don, R. Mark Isaac, and Vernon L. Smith. “Natural Monopoly and the Contestable Markets Hypothesis: Some Preliminary Results from Laboratory Experiments.” Journal of Law and Economics, 27 (1984): 91-113.
Peer Reviewed
1
Copyright
University of Chicago
Comments
This article was originally published in Journal of Law and Economics, volume 27, in 1984.