Price capping and peak-load pricing in network industries

Gert Brunekreeft

No 73, Discussion Papers from University of Freiburg, Institute for Transport Economics and Regional Policy

Abstract: This paper examines the effects of various price-cap rules on peakload pricing. The issue recently gains practical importance in regulated network industries. The formal approach reveals that efficiency properties of various price-cap rules are, notwithstanding some problems, fairly good. A discussion of some practically relevant objections suggests that these objections may be not sufficiently convincing to prohibit (or restrict) peak-load pricing. Overall, a strong case can be made for allowing price-cap regulated firms the flexibility to apply peak-load pricing, if the alternatives are to have either no peak-load pricing or have the regulator prescribe the peak-load structure.

Keywords: regulation; peak-load pricing; network-industries (search for similar items in EconPapers)
JEL-codes: D4 L51 L96 (search for similar items in EconPapers)
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:aluivr:73

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