CUSTOMER-CLASS PRICE-DISCRIMINATION BY ELECTRIC UTILITIES Academic Article uri icon

abstract

  • Despite the concentration on peak-load pricing in public utility pricing theory, electric utilities in the United States have divided consumers by customer type (residential, industrial, commercial) rather than time of use (peak, off-peak) in determining prices. In this paper a theory of customer-class pricing is developed which emphasizes the impact of demand characteristics on optimal prices and the utility's pricing incentives under regulation. It is shown that customer-class demand patterns matter in determining socially optimal prices, and that the rate-of-return regulated utility has an incentive to distort prices to manipulate demand in predictable ways. 1987.

published proceedings

  • JOURNAL OF ECONOMICS AND BUSINESS

author list (cited authors)

  • ECKEL, C. C.

citation count

  • 4

complete list of authors

  • ECKEL, CC

publication date

  • February 1987