Author: | Beard, R. Thompson, H. |
Title: | Efficient versus "popular" tariffs for regulated monopolies |
Journal: | Journal of Business
1996 : JAN, VOL. 69:1, p. 75-88 |
Index terms: | PRICING INDUSTRIES WELFARE |
Language: | eng |
Abstract: | This article analyzes the effects of the popular election of a monopoly regulator on the structure of the resulting price system. Consumers are differentiated by income and vote on a regulator who implements a two-part tariff for all consumers. The structure of the winning tariff depends on the curvature properties of consumer Engel curves. When Engel curves are concave in wealth or income, the most popular tariff involves an excessive fixed charge and pricing below marginal cost. This result contributes to understanding observed anomalies in public utility pricing. |
SCIMA