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Abstract:

Theoretical Economics Paper
The Short-Run Approach to LRMC Pricing for Multiple Outputs with Nondifferentiable Costs
Anthony Horsley and Andrew J Wrobel
June 2000
Paper No' TE/2000/393:
Full Paper (pdf)

Tags: wong-viner theorem; multiple outputs; peak-load pricing; energy storage

Using convex calculus, we extend the Wong-Viner Theorem to nondifferentiable costs by equating the capital inputs' rental prices to their profit-imputed marginal values. Thus extended, the short-run approach to LRMC pricing is applied to peak-load pricing with storage.