A Neoclassical Approach to Peak Load Pricing

John C. Panzar

Bell Journal of Economics, 1976, vol. 7, issue 2, 521-530

Abstract: The well-known result that optimal peak load pricing requires only users who utilize plant to capacity to bear any fraction of the capacity costs is shown to result from the technological assumption of the traditional literature and not from the fundamental nature of the peak load problem. When a neoclassical technology is specified, optimal pricing requires that users in all periods contribute toward the cost of capacity.

Date: 1976
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