This book reproduces and corrects Hotelling’s “Stability in Competition”. His setup is contradictory and incomplete: he uses monopoly theory to explain competition, and fails to include production cost. This book introduces supply function to the two competitive firms, to come to the same stability conclusion. It also disproves Hotelling’s exploitation strategy, and offers a more profitable alternative.

The current context of Economics is useless, for it cannot explain even intuition. It derives only a backward-bending supply curve; its demand curve can even be positive. Its business firms make no profit, and are afraid of competition. Welfare, as defined by Pareto, is merely the repeat statement of a stagnant production possibility curve.This book corrects all these errors, to make Economics useful, and its firms competitive and profitable. Profit is the energy for sustained grow...

Any government must rely on taxation to finance its expenses or its squandering. Being the biggest monopoly, a government has total discretion on how to collect tax, without any need for justification. However, as government’s think tank, economists should offer some advice so as to make the collection more rational and convincing. But, are they capable of doing that? There are two tax collection principles: the ability one and the benefit one. The theory for the ability one is called tax ...

Is road the same as traffic? Up till now, economics has treated road and traffic as one. Instead, this book handles them separately, but the two are linked together by a key element: toll, even a zero one. Is road private or public? This book shows that the distinction is not so simple. This book covers 3 road-or-traffic economists and connects their piecemeal writings to form a complete theory of road and traffic. This book detests all the existing notions of toll, especially congestion t...

Traditional theory uses expected utility to explain gambling and insurance, only to result in numerous contradictory examples. Its reliance on increasing marginal utility also violates basic economic principle. Its inability to reject unfair games or insurance policies is dangerous. This book works out a new theory that is in line with Economics. It maintains the diminishing marginal utility foundation, explains also gambling and shows how to reject unfair games and policies. More importan...

This book unveils the tricks of how Richard Kahn tried to support the optimal tariff theory. He contradictorily assumed away elasticities to derive his optimal tariff as a function of elasticities. He relied on foreign elasticities to force his result positive. When these errors are corrected, Kahn’s tariff can only be zero or negative.

Merger & Acquisition can enlarge a business to take advantage of the so-called economies of scale, but there is another conspiracy. This book teaches you how to raid a company, poor or rich, and even your own company. But if you don’t want to be a raider, do you still buy or keep those stocks?

Auction aims for highest possible price, but economists made two wrong extensions. Some thought the price can be indefinitely increased according to demand; some recommended discount to the successful bidder. The former mistake stems from the misunderstanding that the vertical line is a supply; while the latter is actually the result of too much supply (it is not auction any more). When some scarce resource is auctioned, it may bring in revenue for a government. But, if the price is set to...

Unlike traffic lights, toll plazas only divide traffic into two phases. So, traffic there must be a very smooth process. But the reality is that most toll plazas are congested, if not severely congested. This book uses traffic light mathematics to explain this congestion and proposes new ideas for solving the problem. The conclusion is that toll plazas serve no purpose at all when tolls can be collected through other means.

If the world is free, you can pursue maximum of your objective at will. But you live in a world of limited resources, so Lagrange Mathematics helps you attain the constrained maximum. This book reveals many contradictions: constrained maximum has no constraint; cost is not just negative; a higher utility level may mean a larger welfare loss; etc. Perhaps, you have misunderstood the word “free”. It does not mean free of charge, but means that you are free to hire any optimal amount of input...

Unlike other economists, David Ricardo has produced some innovative theories. His most famous theory is the use of comparative advantage to explain international trade; his rent theory is also widely applied, but his most influential theory must be his explanation to the “diamond-water paradox”. How influential? Cost supply, tariff, protectionism, and communism all stem from this explanation. If this statement sounds blaming, rather than appreciating Ricardo, that is the purpose. Likewise,...

When a country runs a trade deficit, one suggested solution is to raise tariffs. This book shows that such an advice is based on a very wrong theory. The book also points out that the so-called trade deficit is actually an illusion, and any measures taken against an illusion must be futile. Tariff is robbery, a medieval evil.