ABSTRACT
This chapter looks at an analysis of the problems of pricing in so far as they are specific to public enterprise. There are two sets of problems in implementing the principle that public enterprise prices should be cost-based or cost-related: technical, and judgemental. A major issue in public enterprise pricing concerns the extent to which the prices ought to contain elements of profit. The profit element, while being a function of the monopoly opportunities of the enterprise, has to reflect its extra-enterprise obligations and – a somewhat overlapping consideration – its budget-link. Many public enterprises formulate a structure of prices which contains variations between products, regions, times of consumption, or groups of consumers. In other words they subdivide the market into several segments and maintain price differences among them. The term ‘distributional price’ may be understood to signify a price that has a distributional implication, for example, to benefit certain consumers.
