Capacity-contingent nonlinear pricing by regulated firms
- Daniel F. Spulber
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Second-best Pareto optimal pricing by a regulated firm subject to demand and capacity shocks is examined. Nonlinear price schedules for the firm's customers are obtained that are contingent on capacity realizations. The second-best Pareto optimal mechanism also is implemented by an allocation mechanism based on the consumer's choice of a minimum demand or firm power level. The optimal mechanism is implemented as well by a general form of priority pricing.
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- Capacity-contingent nonlinear pricing by regulated firms
Journal of Regulatory Economics
Volume 4, Issue 4 , pp 299-319
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- Kluwer Academic Publishers
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- 1. Northwestern University J.L. Kellogg Graduate School of Management, Leverone Hall, 60208-2001, Evanston, IL, USA