A Simple Method for Evaluating the Marginal Cost of Unsupplied Electricity

Benjamin Bental and S. Abraham Ravid

Bell Journal of Economics, 1982, vol. 13, issue 1, 249-253

Abstract: A method for calculating the marginal cost of industrial power cuts is developed. Firms are assumed to hedge against outages by acquiring back-up generators. The marginal cost of back-up power enables us to infer the marginal cost of a power cut.

Date: 1982
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