Re: Re: Re: query: Frank Ramsey

[Peter Dorman <dormanp@xxxxxxxxxxxxx>]

For the record, I also wrote a short piece, "Ramsey Pricing and Contestability
Pricing".

Peter

Eugene Coyle wrote:

> 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