Re: Re: query: Frank Ramsey

[Eugene Coyle <eugenecoyle@xxxxxxx>]

In public utility pricing, "Ramsey pricing" is pricing such that the total
revenue needs of the utility are met by charging different prices to different
customers.  Ramsey pricing argues that prices should be set based on inverse
elasticity, so that high prices are charged to those who will least respond to
prices -- so that sales don't drop, while low prices are charged to those who
will respond and use more.

    It is remarkable how close this is to the pricing behavior any unconstrained
monopolist would think up.  But Ramsey showed that it would be good for society.

    An ex-PEN-Ler, Ron Baiman, has written some articles about the assumptions
behind all that.

Gene Coyle

Michael Perelman wrote:

> Frank Ramsey was mostly a mathematician.  Sraffa consulted with him when
> writing his book.  He also influenced Keynes on probability.  He is
> probably best known for Ramsey pricing, which is a scheme for pricing
> public utilities.
>
> On Tue, Feb 27, 2001 at 09:11:27AM -0800, Jim Devine wrote:
> > Yesterday, I received an e-mail advertising a macroeconomics textbook that
> > was based on the ideas of Frank Ramsey. It wasn't Keynesian or monetarist,
> > but Ramseyite (to paraphrase the blurb). Does anyone know anything about
> > Ramsey and his ideas? It sounds like he totally ignored the factor of
> > uncertainty in making decisions about the future, but I don't know anything
> > about him.
> >
> > Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine
> >
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael@xxxxxxxxxxxxxxxxx