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Price capping and peak-load pricing in network industries

Author

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  • Brunekreeft, Gert

Abstract

This paper examines the effects of various price-cap rules on peakload pricing. The issue recently gains practical importance in regulated network industries. The formal approach reveals that efficiency properties of various price-cap rules are, notwithstanding some problems, fairly good. A discussion of some practically relevant objections suggests that these objections may be not sufficiently convincing to prohibit (or restrict) peak-load pricing. Overall, a strong case can be made for allowing price-cap regulated firms the flexibility to apply peak-load pricing, if the alternatives are to have either no peak-load pricing or have the regulator prescribe the peak-load structure.

Suggested Citation

  • Brunekreeft, Gert, 2000. "Price capping and peak-load pricing in network industries," Discussion Papers 73, University of Freiburg, Institute for Transport Economics and Regional Policy.
    • Handle: RePEc:zbw:aluivr:73
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    More about this item

    Keywords

    regulation; peak-load pricing; network-industries;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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