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Shared Inputs and Peak Loading in a Neoclassical Framework

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  • John Hartwick

Abstract

Attention is focussed on the degree of substitutability between capacity or capital, the input shared by the different periods over a demand cycle, and variable inputs, the inputs specific to each period. A general expression is obtained for the proportion of price in each period attributable to the shared input. Only in the extreme case of no substitutability should peak user pay the entire capacity costs. Increasing return to scale of the production function type and of the pipeline type are investigated as well as pricing constraints and comparative statics shifts.

Suggested Citation

  • John Hartwick, 1977. "Shared Inputs and Peak Loading in a Neoclassical Framework," Working Paper 274, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:274
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