CROSS-SUBSIDISATION OF RURAL AREAS VIA UTILITY PRICING POLICIES

Public utilities which apply roughly uniform prices to all consumers often engage in cross-subsidisation - charging prices which are below cost for consumers in low population density areas but above cost for consumers in high density areas. The distributional and allocative implications of this practice are examined and it is concluded that some cross-subsidisation may be justifiable on welfare grounds even where no externalities exist. There is, however, little empirical evidence released by utilities to enable assessment of the efficiency of their practices. If nothing else, we highlight the need for greater public disclosure of pricing practices by public utilities.


Issue Date:
1981-12
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/22316
Published in:
Australian Journal of Agricultural Economics, Volume 25, Number 3
Page range:
221-232
Total Pages:
12




 Record created 2017-04-01, last modified 2017-04-04

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)