peak-load pricing

peak-load pricing

the principle of charging higher PRICES for certain products (that cannot be stored) at times of peak demand to reflect the higher MARGINAL COSTS of supplying products at peak times. Peak-load pricing is designed to encourage consumers to spread their demand more evenly so as to avoid the need to invest in plant that is then grossly underutilized at off-peak times. Peak-load pricing is used in electricity supply, railways, etc., using multipart tariffs.

See TWO-PART TARIFF.

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