i The Optimum Structure of Public Prices under Conditions of Risk

The theory of pricing of publicly produced goods has received considerable attention lately. Some authors (Baumol and Bradford, Diamond and Mirrlees, Dixit, Reldstein, Mohring) have been concerned with clarifying and extending the optimal pricing rules for public enterprises derived by Boiteux and Ramsey. Another line of enquiry (Boitrux, Brown and Johnson, Pressman, Turvey, Williamson) has beet] the consideration of pricing in the particular context of a public utility which faces varying demands in different periods. In the former ap roach, the emphasis-as been on consider ng deviations from the marginal cost pricing rule in the presence of constraints on the profit to be made b. the enterprise, distributional eq ity or other constraints on the optimization. The analysis of public utility pricing has been oriented towards deriving optimal pricing rules in the context of variations in demand between periods. In both problems, it has been recognized that a key element of the analysis is the interrelationship between,the demands for dif: erent commodities or of the same commodity in different periods. For example, the demand for the service provided by a public telephone company in each of two periods (known as the peak and oik-peal; erlods) defends on the price charged in both periods. Similarly