%0 Journal Article %9 journal article %J Mining Science %@ 2300-9586 %V X %N 1 %D 2008 %F Jurdziak2008 %T PROBLEM OF DOUBLE MARGINALIZATION IN BILATERAL MONOPOLY OF A MINE AND A POWER PLANT %X After recalling benefits of vertical integration of lignite mine and power plant described in previously published papers the attention is focused on the problem of double marginalization. The solution described in textbooks is presented together with its adaptation to the situation of a mine and a power plant. It has been stressed that lignite pricing above marginal cost in case when power plant can influence price of electric energy can lead up not only to ineffective production in long run (selection of lower pit – realization of suboptimal in Pareto sense variant) but also in short run. It decreases lignite supply lead and lowers profits below those attainable in case of full vertical integrations of both sides. RWE is an example of a firm, which is effective in short run due it has totally eliminated lignite price from mutual counting up between mine and power plant. Unfortunately due to lack of application of pit optimization techniques in log term pit development we can doubt if it is effective in long run. %A Jurdziak, Leszek %P 89-96 %U http://www.miningscience.pwr.edu.pl/PROBLEM-OF-DOUBLE-MARGINALIZATION-IN-BILATERAL-MONOPOLY-OF-A-MINE-AND-A-nPOWER-PLANT,60200,0,2.html