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An Analysis of Fully Distributed Cost Pricing in Regulated Industries

Braeutigam, Ronald R. (1979) An Analysis of Fully Distributed Cost Pricing in Regulated Industries. Social Science Working Paper, 270. California Institute of Technology , Pasadena, CA. (Unpublished) http://resolver.caltech.edu/CaltechAUTHORS:20171016-163908587

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Abstract

This paper examines the economic consequences of allocating common costs by (1) gross revenues, (2) directly attributable costs, and (3) relative output levels (such as ton-miles) to determine fully distributed cost prices for regulated firms. The analysis characterizes FDC tariffs, examining the nature of the economic inefficiency associated with the rules, and explains how opportunities for entry by unregulated firms might change if Ramsey optimal pricing were used instead of FDC pricing.


Item Type:Report or Paper (Working Paper)
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http://resolver.caltech.edu/CaltechAUTHORS:20171120-154022972Related ItemPublished Version
Additional Information:This research was supported in part under a DOE grant, EY-76-G-03-1305, EQL Block. I wish to thank the Environmental Quality Laboratory at the California Institute of Technology for its assistant in this work. I would also like to thank James Quirk, Roger Noll, F. M. Scherer, O.E. Williamson, and an anonymous referee for their helpful comments on an earlier draft. Published as Braeutigam, Ronald R. "An analysis of fully distributed cost pricing in regulated industries." The Bell Journal of Economics (1980): 182-196.
Group:Social Science Working Papers, Environmental Quality Laboratory
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Funding AgencyGrant Number
Department of Energy (DOE)EY-76-G-03-1305
Subject Keywords:Tariffs, Cost allocation, Pricing, Economic costs, Marginal costs, Marginal cost pricing, Market prices, Elasticity of demand, Economic profit, Cost efficiency
Record Number:CaltechAUTHORS:20171016-163908587
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20171016-163908587
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82397
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:17 Oct 2017 23:15
Last Modified:21 Nov 2017 00:08

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