Marginal Cost Pricing and Social Investment Criteria for Electricity Undertakings

  • Arnold C. Harberger


Marginal cost pricing—which for many years appeared to be something of a theoretician’s toy, with little application to reality—has been the subject of revived interest in recent years, largely as the result of the efforts by Electricité de France to put the precept into practice. In this paper, we will review the basic principles governing the marginal cost pricing of electricity, and shall attempt to elaborate upon them at a few critical points.


Electricity Price Project Evaluation Load Curve Marginal Cost Price Economic Rent 
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Selected Bibliography

  1. Harberger, A. C. and N. Andreatta. ‘A Note on the Economic Principles of Electricity Pricing’. Applied Economics Papers, March, 1963.Google Scholar
  2. Marschak, Thomas. ‘Capital Budgeting and Pricing in the French Nationalized Industries’. Journal of Business, April, 1960.Google Scholar
  3. Meek, Ronald L. ‘An Application of Marginal Cost Pricing: The “Green Tariff” in Theory and Practice’. Journal of Industrial Economics, July and November, 1963.Google Scholar
  4. Meek, ‘The Bulk Supply Tariff For Electricity’. Oxford Economic Papers,July, 1963.Google Scholar
  5. Nelson, J. R. Ed. Marginal Cost Pricing in Practice. Prentice-Hall, 1964.Google Scholar
  6. Organization for European Economic Cooperation. The Theory of Marginal Cost and Electricity Rates. Paris: OEEC, 1958.Google Scholar
  7. Steiner, Peter O. ‘Peak Loads and Efficient Pricing’. Quarterly Journal of Economics, November, 1957Google Scholar
  8. Turvey, Ralph. ‘On Investment Choices in Electricity Generation’. Oxford Economic Papers, November, 1963.Google Scholar

Copyright information

© Arnold C. Harberger 1972

Authors and Affiliations

  • Arnold C. Harberger
    • 1
  1. 1.University of ChicagoUSA

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