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An analysis of fully distributed cost pricing in regulated industries

Braeutigam, Ronald R. (1980) An analysis of fully distributed cost pricing in regulated industries. Bell Journal of Economics, 11 (1). pp. 182-196. ISSN 0361-915X. https://resolver.caltech.edu/CaltechAUTHORS:20171120-154022972

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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 by 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:Article
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http://dx.doi.org/10.2307/3003407DOIArticle
http://www.jstor.org/stable/3003407JSTORArticle
http://resolver.caltech.edu/CaltechAUTHORS:20171016-163908587Related ItemWorking Paper
Additional Information:© 1980 RAND Corporation. This research was supported at the California Institute of Technology, 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 assistance in this work. I would also like to thank James Quirk, Roger Noll, F.M. Scherer, the Editorial Board, and an anonymous referee for their helpful comments on an earlier draft. Formerly SSWP 270.
Group:Environmental Quality Laboratory
Funders:
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
Issue or Number:1
Record Number:CaltechAUTHORS:20171120-154022972
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20171120-154022972
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:83365
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:21 Nov 2017 00:08
Last Modified:03 Oct 2019 19:05

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