• Title/Summary/Keyword: Marginal cost pricing

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Optimal Pricing Rules for Public Transport (최적의 대중교통요금 결정원리)

  • 손의영
    • Journal of Korean Society of Transportation
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    • v.8 no.1
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    • pp.17-24
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    • 1990
  • The first-best pricing rule which achieves economic efficiency is to equate price with marginal cost. Since public transport demand is derived from some other demand, the user cost as well as the producer cost are considered in its pricing. The optimal price is derived from a derivative of the total social cost with respect to demand. In case of the bus, if there is enough capacity for demand increase, the optimal price is determined by the marginal producer cost resulting from bus sped decrease and by the marginal user cost resulting from journey time increase. Both are caused by boarding and fare collecting time of an additional passenger. Because of the budget constraints, the marginal cost pricing cannot be applied in practice. Then price discrimination as the second-best pricing is introduced. The Ramsey pricing, to charge different prices for different demand elasticities, and nonuniform prices such as travelcards can be applied. However, there is practical difficulty in implementing these prices because of great informational requirements, the costs of administration and the ease to users.

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Revenue Reconciled Transmission Pricing Using Optimal Power Flow in a Competitive Electricity Market (OPF를 이용한 경쟁적 전력시장에서의 송전가격 수익보정어 관한 연구)

  • Joung, Sang-Houn;Chung, Koo-Hyung;Kim, Bal-Ho
    • Proceedings of the KIEE Conference
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    • 2003.07a
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    • pp.624-626
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    • 2003
  • Transmission pricing is one of important issues related to competitive electricity markets since rational pricing scheme ensures a fair competition between this market participants. Transmission pricing scheme is classified briefly into marginal cost pricing and embedded cost pricing. In economic efficiency, marginal cost pricing is more adequate for competitive electricity market. However, this pricing scheme requires revenue reconciliation since it cannot ensure full recovery of Transco's revenue requirements. This paper presents a new revenue reconciliation to maximize social welfare. For this analysis, this paper provides the results applied by various revenue reconciliation methodologies.

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A Method of Power Transmission Pricing using Power Flow Tracing (전력조류 추적법을 이용한 송전요금 산정법)

  • Ro, Kyoung-Soo
    • Proceedings of the KIEE Conference
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    • 2001.11b
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    • pp.424-428
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    • 2001
  • The methodologies of power transmission pricing are normally divided into two categories such as marginal cost method and embedded cost allocation method. This paper, first, discusses the possible problems that can occur when the marginal cost method is applied to pricing the transmission services. Next, the paper proposes a method to apply the power flow tracing to the transmission network charge. The result of the power flow tracing method is then used in MW-mile method to charge individual loads for the use of transmission network. Effectiveness of the algorithm is verified by computer simulations.

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A Multiple User Class Congestion Pricing Model and Equity (혼잡통행료 산정모형의 개발 및 계층간 형평성 연구)

  • Im, Yong-Taek;Kim, Byeong-Gwan
    • Journal of Korean Society of Transportation
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    • v.25 no.5
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    • pp.183-193
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    • 2007
  • Traditionally, a congestion charge based on first-best congestion pricing theory, namely, the theory of marginal cost pricing theory, is equal to the difference between marginal social cost and marginal private cost. It is charged on each link so as to derive a user equilibrium flow pattern to a system optimal one. Based on this theory this paper investigates on the characteristics of first-best congestion pricing of multiple user class on road with variable demand, and presents two methods for analysis of social and spatial equity. For these purposes, we study on the characteristics of first-best congestion pricing derived from system optimal in time and in monetary unit, and analyze equity from this congestion pricing with an example network.

First- and Second-best Pricing in Stable Dynamic Models (안정동력학 모형에서 최선 통행료 및 차선 통행료)

  • Park, Koo-Hyun
    • Journal of the Korean Operations Research and Management Science Society
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    • v.34 no.4
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    • pp.123-138
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    • 2009
  • This study examined the first- and second-best pricing by stable dynamics in congested transportation networks. Stable dynamics, suggested by Nesterov and de Palma (2003), is a new model which describes and provides a stable state of congestion in urban transportation networks. The first-best pricing in user equilibrium models introduces user-equilibrium in the system-equilibrium by tolling the difference between the marginal social cost and the marginal private cost on each link. Nevertheless, the second-best pricing, which levies the toll on some, but not all, links, is relevant from the practical point of view. In comparison with the user equilibrium model, the stable dynamic model provides a solution equivalent to system-equilibrium if it is focused on link flows. Therefore the toll interval on each link, which keeps up the system-equilibrium, is more meaningful than the first-best pricing. In addition, the second-best pricing in stable dynamic models is the same as the first-best pricing since the toll interval is separately given by each link. As an effect of congestion pricing in stable dynamic models, we can remove the inefficiency of the network with inefficient Braess links by levying a toll on the Braess link. We present a numerical example applied to the network with 6 nodes and 9 links, including 2 Braess links.

A study on pricing for information services (정보서어비스의 가격설정)

  • 권은경
    • Journal of Korean Library and Information Science Society
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    • v.20
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    • pp.383-411
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    • 1993
  • Information and information services are recently recognized as a commodity and libraries and information centers are also considered as a company. Under this circumstance, libraries and information centers encounter the problems how they can effectively achieve the objectives of service institutions and objectives of resource management as companies. Pricing policy for information services must be something to satisfy these two very different objectives. This paper discusses the following issues to develop pricing model for information services, 1) the needs of pricing for information services, 2) the major elements impacting to pricing of information services including the objectives of pricing, cost and demand of information services, and information value, 3) the pros and cons of pricing method using concepts of average cost, price differentiation, and marginal cost, respectively.

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Aircraft Landing Charge Based on Costs (비용에 근거한 공항사용료 결정에 관한 연구 -항공기 착륙료중심-)

  • Yoo, Kwang-Eui
    • The Korean Journal of Air & Space Law and Policy
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    • v.17
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    • pp.29-54
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    • 2003
  • The objectives of this study are to develop more practical and efficient model concerned with airport charge, especially with aircraft landing charge. This study utilizes average pricing and marginal pricing theory as well as cost accounting theory. The average pricing method is useful to make total costs recovery possible in uncongested situation where the marginal costs are too low to recover the total costs of service. The utilization of cost accounting theory with marginal cost pricing theory would improve the practical applicability of the model. In addition, it is necessary to apply cost accounting information in order to estimate more exact cost for the service of landing and take-off of each aircraft type.

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A Study on the Optimal Water Pricing by Long Run Marginal Cost in Korea (장기한계비용을 이용한 한국의 최적 수도요금결정에 관한 연구)

  • Kim, Tai-Yoo;Yoo, Seung-Hoon;Park, Chung-Hyun
    • Journal of Korean Society of Water and Wastewater
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    • v.10 no.3
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    • pp.100-114
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    • 1996
  • Besides insufficient water, water contamination confronts us with 'water crises' of both quantity and quality. However, the daily water consumption per capita of Korea is greater than that of other developed countries. Because of the current low water price, which is lower than a half of production cost, not only does it become difficult to cope promptly with rapidly increasing water demand and water contamination, but it also causes waste of water. We should, therefore, switch over from supply side management-oriented policy to demand side management-oriented policy through a raise of the water rate. This study carries out a cost analysis based on fair return method which is the principle of water pricing in Korea, and it estimates, through equilibrium analysis, long run marginal cost(LRMC), which satisfies allocative efficiency and reflects true social cost to additional one-unit water supply. Based on the results, this study proposes that the estimated LRMC is the optimal price level in water pricing, which is the most important of the demand side management policies. In the end, water conservation effect, price pervasive effect, and social welfare effect are analyzed.

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Marginal Loss Factor using Optimal Power Flow in Power Market (최적조류계산을 이용한 한계손실계수의 전력시장 적용)

  • Ko, Young-Jun;Shin, Dong-Joon;Kim, Jin-O;Lee, Hyo-Sang
    • Proceedings of the KIEE Conference
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    • 2001.07a
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    • pp.509-511
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    • 2001
  • In the competitive electricity market, various pricing methods are developed and practiced in many countries. Among these pricing methods, marginal loss factor(MLF) can be applied to reflect the marginal cost of network losses. For the calculation of MLF, power flow method has been used. However, it shows some shortcomings such as necessity of regional reference node, and absence of an ability to consider network constraints. The former defect might affect adversely to the equity of market participants and the latter might generate an inappropriate price signal. To overcome these defects, the utilization of optimal power flow(OPF) is suggested in this paper. 30-bus system is used for the case study to compare the MLF by the power flow and the OPF method for 24-hour dispatching and pricing.

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A Comparative study on the pricing mechanism and social welfare in the Natural Gas Market (국내 천연가스산업의 도매가격결정방식 비교 분석)

  • Namgoong Yoon;Choi Kiryun;Kim Boyung;Lee Kiho
    • Journal of the Korean Institute of Gas
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    • v.2 no.3
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    • pp.18-24
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    • 1998
  • This paper attempts to improve domestic natural gas pricing system, thereby optimizing social welfare. This is done by deriving theoretical frameworks of natural gas pricing, which make use of both Ramsey component pricing rule and Efficient component pricing rule based on the theory of marginal cost. Allocative efficiency and social welfare between gas prices derived from the three pricing mechanism, present Cost-based pricing, Ramsey component pricing rule and Efficient component pricing rule, are analysed and compared in the case study. For the city gas, allocative efficiency of Cost-based pricing is higher than that of Ramsey component pricing rule and Efficient component pricing rule. In contrast, for the natural gas consumed for power generation, allocative efficiency of Cost-based pricing is lower than the other two pricing systems. It also turns out that social welfare is improved by the prices driven from Ramsey component pricing rule and Efficient component pricing rule rather than present Cost-based pricing.

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