Author : Lucas W. Davis
Publisher :
ISBN 13 :
Total Pages : 31 pages
Book Rating : 4.:/5 (613 download)
Book Synopsis Do Americans consume too little natural gas? : An empirical test of marginal cost pricing by : Lucas W. Davis
Download or read book Do Americans consume too little natural gas? : An empirical test of marginal cost pricing written by Lucas W. Davis and published by . This book was released on 2010 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper measures the extent to which prices exceed marginal costs in the U.S. natural gas distribution market during the period 1991-2007. We find large departures from marginal cost pricing in all 50 states, with residential and commercial customers facing average markups of over 40%. Based on conservative estimates of the price elasticity of demand these distortions impose hundreds of millions of dollars of annual welfare loss. Moreover, current price schedules are an important pre-existing distortion which should be taken into account when evaluating carbon taxes and other policies aimed at addressing external costs.