Peak-load pricing with continuous and interdependent demand

Burness, H. Stuart; Patrick, Robert H.

doi:10.1007/bf00157612

Cited by 11 publications

(5 citation statements)

References 33 publications

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“…Thus, we can define the gross benefit of electricity consumption at time t as BðxðtÞ; tÞ. 6 For further discussion on time-varying demand, see, for example, Dansby (1978) and Burness and Patrick (1991).…”

Section: Electricity Demandmentioning

confidence: 99%

Real-time pricing with ramping costs: A new approach to managing a steep change in electricity demand

Tanaka

2006

Energy Policy

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Section: Electricity Demandmentioning

confidence: 99%

Real-time pricing with ramping costs: A new approach to managing a steep change in electricity demand

Tanaka

2006

Energy Policy

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“…12 Burness and Patrick (1991) solve the consumer's problem considering that the individual demand is…”

Section: The Modelmentioning

confidence: 99%

“…Craven (1971 and1985) and Dansby (1975 and1978) allow time varying demand within pricing periods and examine the optimal length of the pricing periods. Burness and Patrick (1991) analyze the regulation of a monopoly under continuous and interdependent demands and determine the optimal pricing period length. Although the authors do not assume capacity constraints, their model has been a useful reference for the purpose of the present paper.…”

Section: Introductionmentioning

confidence: 99%

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Capacity-based versus time-based access charges in telecommunications

Calzada

2007

J Regul Econ

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“…For non-profit services, shifting demand from peak to off-peak periods may be socially desirable (Burness andPatrick 1991, Radas and. It may lessen congestion, pollution, conserve societal resources and provide other socially desirable outcomes.…”

Section: Off-peak Marketing Strategiesmentioning

confidence: 99%

Service Marketing and Management: Capacity as a Strategic Marketing Variable

Shugan¹

2002

Handbook of Marketing

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We start this chapter with the classical discussion of whether service marketing is different from the marketing of manufactured and extractive (e.g., agriculture, fishing, mining) goods. We conclude that although philosophical debates are inconclusive, certain problems are prevalent for service providers. One of those problems, faced by many but not all service providers, is the problem of coordinating marketing and operations. This problem is often made difficult by the presence of capacity constraints. We devote this chapter to the topic of marketing with capacity constraints.After that general discussion, we argue that both service quality and service strategy are integrally related to capacity decisions. For it is capacity (i.e., available employee hours, available physical facilities, lengths of queues, etc.) that ultimately determines whether the service provider can satisfy and retain buyers. Capacity decisions also impact costs and profitability. There are basic compromises between creating additional capacity to better serve customers and increasing costs.After discussing the relationship between capacity strategy and service strategy, we discuss capacity-constrained strategies in two settings. In the first setting, we examine the case when demand is predictable. This case arises when factors such as predictable seasonality allow us to accurately forecast peak and off-peak demand. Seasonality may be related to the time of day, the day of week, the month of the year or particular holidays.The section on capacity-constrained strategies considers strategies such as demand shifting. Demand shifting occurs when service providers attempt to shift demand from peak to off-peak periods. We discuss both the social welfare as well as the profitability implications associated with these strategies. Beyond demand shifting, we also consider other strategies including non-price rationing, offering different levels of service at times of peak demand and the bundling of services.One interesting part of peak pricing strategies occurs when the opportunity cost of a resource changes over time. For example, consider a restaurant where table space is severely limited but only during peak hours. In this situation, the price of foods (e.g., coffee) that take more time to consume should have much higher prices during peak hours because these foods consume more capacity. Off-peak, however, excess capacity lowers the opportunity cost of consuming capacity to zero.The last section of this chapter, before the conclusions, considers the case of capacityconstrained strategies with unpredictable demand. This case often occurs when exogenous and unpredictable events impact the arrival of buyers. A change in interest rates, a change in weather

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Peak-load pricing with continuous and interdependent demand

Cited by 11 publications

References 33 publications

Real-time pricing with ramping costs: A new approach to managing a steep change in electricity demand

Real-time pricing with ramping costs: A new approach to managing a steep change in electricity demand

Capacity-based versus time-based access charges in telecommunications

Service Marketing and Management: Capacity as a Strategic Marketing Variable

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