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Optimal pricing and capacity choice for a public service under risk of interruption

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  • Fred Schroyen
  • Adekola Oyenuga

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  • Fred Schroyen & Adekola Oyenuga, 2011. "Optimal pricing and capacity choice for a public service under risk of interruption," Journal of Regulatory Economics, Springer, vol. 39(3), pages 252-272, June.
    • Handle: RePEc:kap:regeco:v:39:y:2011:i:3:p:252-272
    DOI: 10.1007/s11149-011-9146-3
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    References listed on IDEAS

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    5. Kleindorfer, Paul R & Fernando, Chitru S, 1993. "Peak-Load Pricing and Reliability under Uncertainty," Journal of Regulatory Economics, Springer, vol. 5(1), pages 5-23, March.
    6. Coate, Stephen & Panzar, John C, 1989. "Public Utility Pricing and Capacity Choice under Risk: A Rational Expectations Approach," Journal of Regulatory Economics, Springer, vol. 1(4), pages 305-317, December.
    7. Eeckhoudt, Louis & Etner, Johanna & Schroyen, Fred, 2009. "The values of relative risk aversion and prudence: A context-free interpretation," Mathematical Social Sciences, Elsevier, vol. 58(1), pages 1-7, July.
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    10. Panzar, John C & Sibley, David S, 1978. "Public Utility Pricing under Risk: The Case of Self-Rationing," American Economic Review, American Economic Association, vol. 68(5), pages 888-895, December.
    11. Doucet, Joseph A & Roland, Michel, 1993. "Efficient Self-Rationing of Electricity Revisited," Journal of Regulatory Economics, Springer, vol. 5(1), pages 91-100, March.
    12. Rajnish Kamat & Shmuel S. Oren, 2002. "Exotic Options for Interruptible Electricity Supply Contracts," Operations Research, INFORMS, vol. 50(5), pages 835-850, October.
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    14. Benassy, Jean-Pascal, 1977. " On Quantity Signals and the Foundations of Effective Demand Theory," Scandinavian Journal of Economics, Wiley Blackwell, vol. 79(2), pages 147-168.
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    19. Lin, Winston T. & Chen, Yueh H. & Chatov, Robert, 1987. "The demand for natural gas, electricity and heating oil in the United States," Resources and Energy, Elsevier, vol. 9(3), pages 233-258, October.
    20. Hervé Moulin, 2000. "Priority Rules and Other Asymmetric Rationing Methods," Econometrica, Econometric Society, vol. 68(3), pages 643-684, May.
    21. Hung-po Chao, 1983. "Peak Load Pricing and Capacity Planning with Demand and Supply Uncertainty," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 179-190, Spring.
    22. Ross Baldick & Sergey Kolos & Stathis Tompaidis, 2006. "Interruptible Electricity Contracts from an Electricity Retailer's Point of View: Valuation and Optimal Interruption," Operations Research, INFORMS, vol. 54(4), pages 627-642, August.
    23. Woo, Chi-Keung, 1990. "Efficient Electricity Pricing with Self-Rationing," Journal of Regulatory Economics, Springer, vol. 2(1), pages 69-81, March.
    24. Visscher, Michael L, 1973. "Welfare-Maximizing Price and Output with Stochastic Demand: Comment," American Economic Review, American Economic Association, vol. 63(1), pages 224-229, March.
    25. Ravi Kanbur, S. M., 1982. "Increases in risk with kinked payoff functions," Journal of Economic Theory, Elsevier, vol. 27(1), pages 219-228, June.
    26. MARCHAND, Maurice G., 1974. "Pricing power supplied on an interruptible basis," LIDAM Reprints CORE 186, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    27. Crew, Michael A & Fernando, Chitru S & Kleindorfer, Paul R, 1995. "The Theory of Peak-Load Pricing: A Survey," Journal of Regulatory Economics, Springer, vol. 8(3), pages 215-248, November.
    28. Meyer, Robert A, 1975. "Monopoly Pricing and Capacity Choice under Uncertainty," American Economic Review, American Economic Association, vol. 65(3), pages 326-337, June.
    29. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    30. Tschirhart, John T, 1980. "On Public Utility Pricing under Stochastic Demand," Scottish Journal of Political Economy, Scottish Economic Society, vol. 27(3), pages 216-234, November.
    31. Hayne E. Leland, 1968. "Saving and Uncertainty: The Precautionary Demand for Saving," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(3), pages 465-473.
    32. Wilson, Robert, 1989. "Ramsey Pricing of Priority Service," Journal of Regulatory Economics, Springer, vol. 1(3), pages 189-202, September.
    33. Marchand, M. G., 1974. "Pricing power supplied on an interruptible basis," European Economic Review, Elsevier, vol. 5(3), pages 263-274.
    34. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
    35. Turvey, Ralph, 1970. "Public Utility Pricing and Output Under Risk: Comment," American Economic Review, American Economic Association, vol. 60(3), pages 485-486, June.
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    Cited by:

    1. Marianne Lefebvre, 2011. "Sharing Rules for Common-Pool Resources when Self-insurance is Available: an Experiment," Working Papers 11-22, LAMETA, Universtiy of Montpellier, revised Jun 2012.

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    More about this item

    Keywords

    Service interruption; Rationing; System reliability; Second-best pricing; Capacity choice; Prudence; D11; D24; D45; H42; Q25;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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