Load management programs, cross-subsidies and transaction costs: the case of self-rationing

Load management programs are used by electric utilities to reduce the amount of reserve capacity that is required in order to meet peak consumption. Although these programs are generally offered to costumers as alternatives to regular service, economic models of their allocative efficiency have always been based on the implicit assumption that they were the only services available. This paper presents a model in which the consumer has the option to subscribe to regular service or to participate in a particular load management program, called self- rationing.

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