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4. Marginal costs: concepts and practical calculations
4.1 General economic definitions
In the simplest case (a single, homogeneous product), marginal cost is equal to the cost of producing an additional unit of a good.
In the framework of marginalist analysis, with pure and perfect competition and maximizing behavior, selling at marginal cost maximizes overall surplus.
The diagram at 1 illustrates this intuitively.
The demand (respectively supply) curve corresponds to the quantity demanded (offered) in descending (ascending) order of utility (cost, i.e. with diminishing returns). The overall surplus is equal to the sum of the blue and gray areas on the diagram.
The...
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Marginal costs: concepts and practical calculations
From marginal costs to pricing structures
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Bibliography
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Regulations
Main regulatory texts concerning regulated tariffs and the public electricity service
Law n° 46-628 of April 8, 1946: law on the nationalization of electricity and gas.
Law no. 49-1090 of August 2, 1949: law amending articles 8, 23, 46 and 47 of law 46-628 of April 8, 1946.
Law no. 80-531 of July 15, 1980: law on energy conservation and the use of heat.
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Direction générale de l'énergie et des matières premières (DGEMP): representative of public authorities in the field of energy; publishes reference costs for electricity production.
Commission de régulation de l'énergie (CRE) :
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