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The Theory of Peak-Load Pricing: A Final Note

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  • George W. Wilson

Abstract

This note presents a formal reconciliation of two approaches to the analysis of peak and off-peak pricing. It argues that the differences reside in varying conceptions of the time period over which costs and revenues are calculated. Both versions yield formally correct solutions so that no substantive problems emerge, as noted in the reconciliation. However, varying rates of production, implicit in the two approaches, may violate the cost linearity assumptions made in both and hence vitiate the traditional conclusions.

Suggested Citation

  • George W. Wilson, 1972. "The Theory of Peak-Load Pricing: A Final Note," Bell Journal of Economics, The RAND Corporation, vol. 3(1), pages 307-310, Spring.
    • Handle: RePEc:rje:bellje:v:3:y:1972:i:spring:p:307-310
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    Cited by:

    1. Mark W. Gellerson & Shawna P. Grosskopf, 1980. "Public Utility Pricing, Investment, and Reliability under Uncertainty: A Review," Public Finance Review, , vol. 8(4), pages 477-492, October.

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