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Le Tarif Vert Retrouve: The Marginal Cost Concept and the Pricing of Electricity in Britain and France, 1945-1970

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  • Martin Chick

Abstract

This article compares the development of marginal cost pricing in the French and UK nationalised electricity industries between 1945 and 1970. Asking why French 'marginaliste' economists like Allais and Boiteux enjoyed more influence than their UK counterparts like Meade, political decisions concerning the organisation of the electricity industries, the differing influence of industrial and consumer interests, and the early postwar choices of hydro and thermal investment in France, are advanced as explanations. In the UK, the Treasury pushed nationalised industries towards marginal cost pricing, requiring them to earn rates of return on existing investment and to subject the proposed investment to test discount rates during the 1960s. The paper closes by arguing that these different routes to marginal cost pricing in the French and UK nationalised electricity industries had significant effects on later government and public attitudes towards the privatisation and liberalisation of the national electricity industry and market.

Suggested Citation

  • Martin Chick, 2002. "Le Tarif Vert Retrouve: The Marginal Cost Concept and the Pricing of Electricity in Britain and France, 1945-1970," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 97-116.
    • Handle: RePEc:aen:journl:2002v23-01-a05
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    Cited by:

    1. Adnane Kendel & Nathalie Lazaric, 2015. "The diffusion of smart meters in France: A discussion of the empirical evidence and the implications for smart cities," Post-Print halshs-01246427, HAL.
    2. Madureira, Nuno Luís, 2010. "The European debate on rate systems in the interwar period," Energy Policy, Elsevier, vol. 38(8), pages 4703-4711, August.
    3. Martin Chick, 2006. "The marginalist approach and the making of fuel policy in France and Britain, 1945–72," Economic History Review, Economic History Society, vol. 59(1), pages 143-167, February.
    4. Robert Millward, 2011. "The Institutional Economic History of Infrastructure Industries, 1830–1990: Ideology, Technology, Geopolitics?," Chapters, in: Matthias Finger & Rolf W. Künneke (ed.), International Handbook of Network Industries, chapter 6, Edward Elgar Publishing.

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    JEL classification:

    • F0 - International Economics - - General

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