Archive for the ‘price theory’ Category

Measuring the Cost of Health Care— The Effect of Price Controls

June 24th, 2013 No comments

I am puzzled by how we should think about measuring the value of output in health care, or any market, when the prices are not at the competitive level.
What if the government has a maximum price of $500 for an angiogram, but the free market price would be $900?
In a free market, we measure GDP using output and market prices. Read more…

Categories: a.research, health care, price theory Tags:

The Just Price

December 19th, 2009 No comments

Suppose I am the only person who can sell a widget to John Doe. It costs me $10 to sell it to him, including the cost of my time and a standard profit rate. He would pay up to $30 for it, if he had to. What price am I justified in charging, if I can make a take-it-or-leave-it offer?

Note that I am leaving John Doe better off than if he never met me even if I charge him $29.

Categories: ethics, price theory, religion Tags:

October 17th, 2007 No comments

Negative Reviews and Inframarginal Subsidies for Investment. MR emailed me recently asking me to look at part of a review by RM of his recent book. As you can see, the review says the book’s theory is “remarkable”, quotes at length including a diagram, and then implies that the theory is wrong, without saying why. (Click here to read more.)

Categories: finance, Japan, price theory, reviews, writing Tags: