The Tragic Inefficiency of M-Ecpr

New York University, Center for Law and Business, Working Paper No. 98-003

18 Pages Posted: 28 Apr 1998

See all articles by Nicholas Economides

Nicholas Economides

New York University - Leonard N. Stern School of Business - Department of Economics

Date Written: December 1997

Abstract

We show that application of the so-called "Market Determined Efficient Component Pricing Rule," the "Efficient Component Pricing Rule," and, in general, of pricing rules that are based on private opportunity costs would perpetuate pricing inefficiencies and result in lower social surplus than pricing which is based on social opportunity cost rather than private opportunity costs.

JEL Classification: L13, L40

Suggested Citation

Economides, Nicholas, The Tragic Inefficiency of M-Ecpr (December 1997). New York University, Center for Law and Business, Working Paper No. 98-003, Available at SSRN: https://ssrn.com/abstract=81269 or http://dx.doi.org/10.2139/ssrn.81269

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