Abstract
One of the main purposes of electric utility regulation is to determine the price of electricity to be charged to a utility’s residential, commercial, and industrial customers. While the price of electricity for each of these customer groups is not determined by market forces, information on the customer’s demand structure and the firm’s costs of production is generally used in the rate-setting process. Since these output prices are crucial in determining the level and pattern of electricity usage as well as the level of firm costs and profits, it is important to analyse whether these regulated prices satisfy desirable economic criteria. The goal of this paper is to examine whether prices for the three major electricity customer groups satisfy the economic efficiency requirements embodied in the Ramsey pricing rule.
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© 1987 Michael A. Crew
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Nelson, J.P., Roberts, M.J., Tromp, E.P. (1987). An Analysis of Ramsey Pricing in Electric Utilities. In: Crew, M.A. (eds) Regulating Utilities in an Era of Deregulation. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-08714-3_7
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DOI: https://doi.org/10.1007/978-1-349-08714-3_7
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