ABSTRACT
Price differences which do correspond to cost differences may be too costly or unacceptable as, for example, in the case of charging different postage for letters between London and Birmingham on the one hand and Penzance and Inverness on the other. The roughest approximation to a price per therm which is higher in winter than at other times is a price which is higher for consumption billed for the winter quarter. If the potential customers excluded from supply are those whose marginal cost is highest, their exclusion will lower the price charged to those who remain to a level equal to the weighted average of their marginal costs. The trouble with the kind of condition is that it requires knowledge of the excluded consumers’ total willingness to pay rather than just their marginal willingness as measured by price. A clear message could be given to all consumers that the price was higher in the designated period.
