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Peak Load Pricing: Who Should Pay?

Hahn, Robert W. (1979) Peak Load Pricing: Who Should Pay? Social Science Working Paper, 284. California Institute of Technology , Pasadena, CA. (Unpublished)

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There is a surprising lack of congruity between the A-J literature and the peak load pricing literature. Much of the A-J literature assumes increasing returns to scale. This can be contrasted with the theory of peak-load pricing, which focuses on the case of decreasing turns to scale. This paper extends the theory of peak load pricing by considering the case where the average variable cost curve initially exhibits increasing returns to scale. The principal result is that off-peak users should rarely shoulder the burden of capacity costs.

Item Type:Report or Paper (Working Paper)
Additional Information:I would like to thank Roger Noll for the fundamental insight regarding the possibility of U-shaped average cost curves. I also benefited from the comments of Ron Braeutigam, Jim Quirk and Derek McKay; however, they deserve no credit for any of the errors which may remain.
Group:Social Science Working Papers
Series Name:Social Science Working Paper
Issue or Number:284
Record Number:CaltechAUTHORS:20171016-134253688
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82378
Deposited By: Jacquelyn Bussone
Deposited On:16 Oct 2017 21:13
Last Modified:03 Oct 2019 18:53

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