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Comments on: Is it wrong that … http://www.tvhe.co.nz/2011/08/12/is-it-wrong-that/ The Visible Hand in Economics Thu, 11 Aug 2011 23:06:14 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2011/08/12/is-it-wrong-that/#comment-33702 Thu, 11 Aug 2011 23:06:14 +0000 http://www.tvhe.co.nz/?p=6045#comment-33702 @rauparaha

Re-reading it that is exactly what he is saying. Price is determined exogenously, and for a fixed set of inputs output rises as price rises – which is pretty danged sweet.

I had presumed that they had already monopolised the market for energy at this point – given that they could undercut everyone.

So if they are just a residual claimant in the market, they face the “market price” and their productivity increases – which is pretty sweet for profits.

I can’t understand why the business wouldn’t take over the entire energy market though.

]]> By: rauparaha http://www.tvhe.co.nz/2011/08/12/is-it-wrong-that/#comment-33701 Thu, 11 Aug 2011 22:34:59 +0000 http://www.tvhe.co.nz/?p=6045#comment-33701 I thought he meant that, as national supply falls, their company’s production rises and they undercut the other suppliers since their MC of that extra production is near zero. So the price they face rises as they take a larger share of the market. Of course, that presupposes effective competition in the wholesale market for electricity so I don’t know how realistic it is.

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