IUE: Introduction & Contents


I&UE – 2nd – Full IntroIntroduction and detailed contents of Infrastructure and Utility Economics (2nd edition) published in 2017, as a pdf file freely downloadable by all

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Download this pdf file to see the contents of the 2nd edition of Infrastructure and Utility Economics. This contents pdf includes the book’s Introduction, a list of Chapters, and the detailed contents of this 424 page book. For the general economist Chapter 3 explains the economics of sunk costs using general sequential models, which should be of wide interest to all economists, while Chapter 4 uses decision-trees to develop general sequential models of players entering markets with different levels of sunk costs to explain the evolution of common market structures, and in particular why the classic utilities are normally monopolies. Adopting a capabilities-based view of the firm and using simple business systems models of the evolution of an industry and its customers the classic market structures are derived as end-state games if the business environment stagnates. This approach provides a far more satisfying explanation than the standard ‘high fixed cost argument’ described in most elementary textbooks, which is criticised by professional utility economists for not capturing the crucial feature of utilities, namely that infrastructure is a sunk cost not a fixed cost.

For professionals Chapters 5-8 explain and derive some of the standard methodologies used in serious economic work, before using this framework to review global experience of infrastructure and utility restructurings in recent years. For students Chapter 1 explains how to analyse an industry value chain, the basic functions of the utility industries, and the key differences between the four core stages of generation, transmission, distribution and retail. For academics and professional economists Chapter 2 examines the evidence for the neoclassical assumption of economies of scale and scope. Chapters 9-12 use the theory of sunk costs to examine recent global experiences when restructuring and privatising utilities, while Chapter 13 summarizes the whole book in four pages, and the Book’s Appendix summarizes the conventional welfare economics models of utilities as given in neoclassical textbooks, and examines their shortcomings as practical policy tools.


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