marginal cost

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marginal cost

[′mär·jən·əl ′kȯst]
(industrial engineering)
The extra cost incurred for an extra unit of output.
References in periodicals archive ?
One of the over-arching themes in these studies is the high economic cost of departures from marginal cost pricing.
His friend and former graduate student, Irwin Stelzer, urged him to take the job, arguing "you've just written the book [urging marginal cost pricing for utilities] and here's your chance to do it.
Every first year student of telecommunications law and economics learns that marginal cost pricing is infeasible, indeed irrational, in communications markets, yet the FCC requires evidence of such pricing as the forbearance threshold," says Phoenix Center Chief Economist and study co-author Dr.
When advertising is free, the market outcome goes back to marginal cost pricing.
A study of 77 Ontario cities with volumetric charges finds that water use by residential and nonresidential customers deviated from levels that would be expected under marginal cost pricing by 47.
point that marginal cost pricing will follow a ban on tacit collusion.
It can be seen that in fact the majority of asking prices are in between the equilibrium prediction and the marginal cost pricing line.
So somewhat perversely, ETS actually creates an incentive for power companies to keep the top end of their capacity dedicated to fossil fuels as it will help maintain this windfall profit within the marginal cost pricing mechanism.
If the goal is greater efficiency, the literature suggests that marginal cost pricing yields the "best" user charges because it encourages the efficient use of public sector resources.
marginal cost pricing, average cost pricing, Ramsey pricing rule, rate of return regulation and price caps.
Nonetheless, restructuring with its marginal cost pricing and elimination of cross-subsidies may be costly for some consumer groups, and perhaps for most rural consumers.
California has been a bellweather state in inaugurating regulatory pricing techniques,(1) and the California Public Utilities Commission (CPUC) has moved marginal cost pricing from crude to refined.