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Published in the Rand Journal, Summer 1991.

Download the Paper (1.1 MB, PDF file) - July 30, 1991 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing.

ABSTRACT:
Consider a public utility that offers its service at two different times. We study the effects of a change from uniform pricing throughout the day to peak-load pricing. We show that for a utility constrained to operate with a fixed rate of return on capital, the introduction of peak-load pricing can plausibly reduce the price of the service it both in peak and off-peak times. We also find that peak-load pricing can lead to either greater or smaller capacity than uniform pricing. We find a simple criterion for determining whether a particular individual gains or loses from peak-load pricing.

SUGGESTED CITATION:
Ted Bergstrom and Jeffrey K. Mackie-Mason, "Some Simple Analytics of Peak-Load Pricing" (July 30, 1991). Department of Economics, UCSB. Ted Bergstrom. Paper 1991A.
http://repositories.cdlib.org/ucsbecon/bergstrom/1991A