Peak Load Pricing

Discipline: Economics

Peak-load pricing is a policy of raising prices when the demand for a service is at its highest. The most recent analysis of this pricing policy stems from American research in the 1960s and 1970s.

Peak-load pricing is often used by electricity and telephone utilities as a means of reflecting the investment they have made to meet peak demand for their services.

Also see: average cost pricing, cost-push inflation, marginal cost pricing, mark-up pricing

Source:
P L Joskow, 'Contributions to the Theory of Marginal Cost Pricing', Bell Journal of Economics, 7,1 (Spring, 1976);
O E Williamson, 'Peak Load Pricing and Optimal Capacity under Indivisibility Constraints', American Economic Review, vol. LVI (1966), 810-27

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