Optimal Pricing of Publicly Supplied Private Goods: A Case Study of the Pricing of NIST Standard Reference Materials.
Optimal Pricing of Publicly Supplied Private Goods: A
Case Study of the Pricing of NIST Standard Reference
Fuller, S. K.
UMI Number 9817619; Thesis; 209 p. January 30, 1998.
standard reference materials; costs
The objective of this study was to provide a framework
for determining optimal prices and production plans for
a welfare-maximizing public enterprise that produces
multiple goods, faces a budget constraint, and is
obligated to meet all demand. Public enterprises often
operate under conditions of decreasing marginal cost
where first-best profit-maximizing rules lead to
deficits. In order to cover costs, prices therefore
need to deviate from marginal cost. A public-sector
pricing model in the Boiteux tradition computes price
and output combinations that minimize the resulting
deadweight loss. We first described the Boiteux model
and its extensions. We focused on the Ramsey version of
the model and applied it to the pricing problem of the
Standard Reference Materials (SRM) Program at the
National Institute of Standards and Technology (NIST).
It supplies samples of materials whose physical or
chemical properties are precisely characterized; they
are used as intermediate goods by firms and science
laboratories who use them to calibrate manufacturing
equipment or scientific apparatus for quality control.