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- W2044679580 abstract "A widely-applied criterion for judging the appropriateness of various alternatives to imported oil involves comparison of the per-barrel cost of the alternative with the per-barrel ‘incremental cost’ of imported oil. The incremental cost of imported oil differs from its price if and only if the attempt to change import levels causes a price change. Typically, extra imports are assumed available only at a higher price. Under this assumption, the incremental cost of a marginal barrel of imported oil is computed by adding to its price the increment in expenditure on the inframarginal units caused by the increase in demand for imports. In this paper we identify and illustrate two potentially important pitfalls in applying the incremental-cost criterion: (1) ‘the’ incremental cost of imported oil depends on the cause of the change in import levels; and (2) even if the appropriate incremental cost can be determined, direct application of the incremental-cost yardstick ignores important considerations." @default.
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- W2044679580 date "1983-06-01" @default.
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- W2044679580 title "Some pitfalls in the application of the ‘incremental-cost’ approach to formulating U.S. energy policy" @default.
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- W2044679580 doi "https://doi.org/10.1016/0165-0572(83)90009-9" @default.
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