| Abstract: | Benefit-cost analysis is used to show that even with only one electricity production technique, marginal cost pricing of electricity in a firm off-peak period might reduce social welfare rather than improve it. This may occur when there are more periods with dissimilar demands for power than feasible prices for electricity. Thus the conclusion is reinforced that it may be more important to charge a higher price for electricity during periods of peak demand than a price equal to marginal running costs during the most off-peak hours. |
