Ramsey pricing of electricity under unknown bypass costs

Ira HOROWITZ, Dewey SEETO, Chi Keung WOO

Research output: Contribution to journalArticlespeer-review

5 Citations (Scopus)


This paper derives Ramsey prices for the realistic situation in which bypass costs are unknown to both a regulator and an electric utility, in particular, to any useful level of precision. It is shown that the traditional inverse elasticity rule will still yield Ramsey prices that are incentive compatible. The Ramsey prices require relatively little information to implement, and we show the relevant elasticities to use. Modifications of these Ramsey prices that account for political realities are also provided. Copyright © 1996 by the IAEE. All rights reserved.
Original languageEnglish
Pages (from-to)59-77
JournalEnergy Journal
Issue number2
Publication statusPublished - 1996


Horowitz, I., Seeto, D., & Woo, C.-K. (1996). Ramsey pricing of electricity under unknown bypass costs. The Energy Journal, 17(2), 59-77. doi: 10.5547/ISSN0195-6574-EJ-Vol17-No2-4


  • Electricity
  • Ramsey pricing
  • Bypass costs
  • Electric utilities
  • Regulation


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