The present article contributes to the history of the concept of natural monopoly, focusing on the reconstruction of its origins. The paper considers various facets of natural monopoly: the expression itself; the singling out of the concrete situations to which it is applied; the inquiry into economies of scale; the consideration of their incompatibility with perfect competition; the drawing of the diagram; and the need for government intervention. In this paper each of the above features is separately examined from a historical perspective. Priorities and influences are then traced, and in particular it is found that the pivotal figure in this historical reconstruction is that of Edgeworth. The relation of the concept of natural monopoly with that of competition is also highlighted, as well as its policy implications.Natural monopoly, economies of scale, competition, cost curves, network industries, contestable markets, barriers to entry, market power,

The aim of this paper is to investigate a vertically di¤erentiated market served either by a multiproduct monopolist or by duopolists, in which a public authority aiming at increasing the welfare level can choose among two instruments, namely, quality taxation/subsidization, and minimum quality standard. In the monopoly case they are equivalent as to the social welfare level, in that both allow the regulator to achieve the second best level of social welfare he would attain if he were to set qualities under the monopoly pricing rule, while they are not equivalent in terms of the distribution of surplus. In the duopoly regime, we show that there exists a taxation/subsidization scheme inducing …rms to produce the socially optimal qualites.JEL classi…cation: H21, L12, L13

A Story Worth Remembering

It is well known that one of the features of Public Choice, political realism, in Italy is embedded in a time-honored tradition going back to Machiavelli, and perpetuated by G. Mosca and Pareto in their political and sociological writings. The scientific spirit, which in their era led to the foundation of various social disciplines, fostered the application of economic analysis to the political sphere. In this context the initiator of the pure theory of public finance, Antonio de Viti de Marco (1858Marco ( -1943, formulated an economic model of the state, consisting of two types of constitutional extremes: the absolute state, and the democratic state. In this work, we ask how this model may be reconciled to G. Mosca and Pareto's theory of the ruling class, which De Viti de Marco agreed with. Finally, we analyze the validity of this theoretical construction for the interpretation of collusion, rent seeking and "clientelism", i.e. the redistribution of extracted rent, which takes place in the form of discretionary allocation of public jobs, public contracts and other corporative favours. What emerges provides reasons to reflect upon for further developments in Public Choice.

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