The Short-Run Approach to LRMC Pricing for Multiple Outputs with Nondifferentiable Costs

Abstract

Using convex calculus, we extend the Wong-Viner Theorem to nondifferentiable costs by equating the capital inputs' rental prices to their profit-imputed marginal values. Thus extended, the short-run approach to LRMC pricing is applied to peak-load pricing with storage.Wong-Viner theorem, multiple outputs, peak-load pricing, energy storage