WHY DO WE PRICE ELECTRICITY THE WAY WE DO - CANADIAN POLICY IN THE LIGHT OF POLITICAL-ECONOMIC THEORIES OF GOVERNMENTAL BEHAVIOR

In the past few decades, crown electrical utilities have exhausted available economies of scale. At marginal-cost prices, the utilities could recover costs and even a rent. Yet the available rents have not been collected through economically efficient pricing, but distributed to consumers through low prices. Who benefits from this policy? Second-best prices are found subject to the constraint that profits are nil, and are compared to actual pricing formulas. The results are used as informal tests of various theories of public decision-making. Most theories provide a partial, but no theory provides a complete, explanation of pricing behaviour.