Ramsey pricing of electricity under unknown bypass costs

Ira HOROWITZ, Dewey SEETO, Chi Keung WOO

Research output: Contribution to journalArticles

5 Citations (Scopus)

Abstract

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
Volume17
Issue number2
DOIs
Publication statusPublished - 1996

Citation

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

Keywords

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

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