Electronic Resource
Berkeley, Calif.
:
Berkeley Electronic Press (now: De Gruyter)
Topics in theoretical economics
6.2006, 1, art8
ISSN:
1534-598X
Source:
Berkeley Electronic Press Academic Journals
Topics:
Economics
Notes:
In order to incorporate demand interdependencies into the analysis of fairness between the different consumer groups of a multi-product public utility, Baumol (1986) designed the burden test. This test checks whether the price of a single good generates net incremental revenues which cover at least the incremental costs of the good. It is, however, more reasonable to compare net incremental revenues and net incremental costs. Furthermore, it is useful to extend the analysis to groups of goods. Therefore, we develop a new fairness test, which we call the net burden test, and characterize its properties.
Type of Medium:
Electronic Resource
URL:
http://www.bepress.com/bejte/topics/vol6/iss1/art8
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