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Le Tarif Vert Retrouvé: 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 Retrouvé: The Marginal Cost Concept and the Pricing of Electricity in Britain and France, 1945-1970," The Energy Journal, , vol. 23(1), pages 97-116, January.
    • Handle: RePEc:sae:enejou:v:23:y:2002:i:1:p:97-116
    DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No1-5
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    References listed on IDEAS

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    1. Martin Chick, 1990. "Governments, Industries and Markets," Books, Edward Elgar Publishing, number 85.
    2. Leslie Hannah, 1982. "Engineers, Managers and Politicians," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-03446-8, October.
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