Modeling the structure of gas distribution costs in urban areas

Abstract Urban-wide gas distribution cost models are developed and estimated, using capital costs, gas market, and population density data over cross-sections of communities served by two different utilities, with a particular emphasis on the multiproduct, multidimensional character of gas distribution: These models are used to clarify such policy issues as the allocation of joint costs through marginal cost pricing, the existence of ecpnomies of scale and density, and the appropriateness of natural monopoly status for gas distribution utilities.