Peak load problem: a neoclassical approach

Thesis/Dissertation · Wed Jan 01 04:00:00 EST 1986

OSTI ID:6724611

Cheong, K

The neoclassical production technology is assumed to discuss the peak load problem in a competitive market and to extend Panzar's (1976) work on welfare maximizing peak load pricing. The cost structure of a firm with the neoclassical production technology facing a peak load problem is also discussed. It is emphasized that the peak load problem is not a unique problem associated with regulated monopolies. It is also shown that the additively separable cost function over periods, which is widely employed in the peak load literature, is only possible under the assumption of fixed coefficient production technology. With the discussion of profit maximization of a competitive firm facing the peak load problem, two interesting results are obtained: (1) if the demand in one period increases, not only the price in the period rises but the price in the other period also decreases and, thus, the consumers in the other period are benefitted even though two demands are independent of each other. (2) If free entry and exit of firms are allowed in the long run, it is possible that the number of firms in the industry may decrease when the demand in any period increases. Panzar's work is extended by adding a comparative static analysis of demand changes, and the case where a break-even constraint is imposed.

• Research Organization: Cincinnati Univ., OH (USA)
• OSTI ID: 6724611
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
296000 -- Energy Planning & Policy-- Electric Power
CAPACITY
DEMAND FACTORS
ECONOMIC ANALYSIS
ECONOMICS
MONOPOLIES
PEAK LOAD
PEAK-LOAD PRICING
PRICES
PRODUCTION
PROFITS