@techreport{NBERw15885,
 title = "Do Americans Consume Too Little Natural Gas? An Empirical Test of Marginal Cost Pricing",
 author = "Lucas W. Davis and Erich Muehlegger",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "15885",
 year = "2010",
 month = "April",
 URL = "http://www.nber.org/papers/w15885",
 abstract = {This paper measures the extent to which prices exceed marginal costs in the U.S. natural gas distribution market during the period 1991-2007. We find large departures from marginal cost pricing in all 50 states, with residential and commercial customers facing average markups of over 40%. Based on conservative estimates of the price elasticity of demand these distortions impose hundreds of millions of dollars of annual welfare loss. Moreover, current price schedules are an important pre-existing distortion which should be taken into account when evaluating carbon taxes and other policies aimed at addressing external costs.},
}