Rates and Service

The ideal rate is one which assesses to each customer the true cost of serving him, and the public must be heard when it asks for some demonstration that the wide spread in the cost to different customers of the same commodity has a reasonable basis. It is difficult for the layman to believe that one customer can be profitably supplied with a commodity at one cent per unit, while it costs ten or even fifteen cents per unit to supply the same commodity to another customer. While such a demand of the public is essentially reasonable, to comply with it is not simple. Arbitrary cost allocations have played so important a part in most studies of the problem and qualified experts have differed so strongly on the proper allocation of large items of cost that the most elaborate studies, fortified with charts and tables, have in the end simmered down very largely to matters of opinion. ... It is improbable that sufficient data will ever be available to eliminate

Business · Consumer Market Behavior and Pricing · Economic and Environmental Valuation · Social Issues and Policies