Pricing in the Nuclear Power Industry: Public or Private Interest?

This paper tests empirically the Ramsey version of the public-interest theory of regulation by examining the pricing practices in the nuclear power industry, using a 1985 cross-sectional sample of 40 electric utilities. Other researchers have avoided this segment of the industry because of difficulties with nuclear fuel data, or perceived differences in the underlying production function. We show that regulators respond to political influences according to the Stigler-Peltzman version of regulation and that Ramsey pricing cannot be validated, at least for the nuclear segment of the electric power industry.