Abstract
This chapter provides an overview of Ramsey pricing. Ramsey pricing is characterized by a particular trade-off between the level of prices and the structure of prices. The level of prices is primarily influenced by the value of Π° chosen. Ramsey pricing, therefore, can stand for low pricing and also for high pricing policies, for deficit enterprises, cost-covering ones, or for profit-making enterprises. All or some prices can fall below marginal costs to bring about a deficit Π°. The lower and the upper bounds of Π° are widely separated. Therefore, Ramsey prices range from zero tariffs to unconstrained profit maximizing prices. The economic consequences of pricing under revenue-cost constraints depend on the concrete choice of Π°. The usual exclusive concentration on the structure of prices relegates to the background of the economic discussion that a low Π° will imply a low pricing level and, if demands react normally, a comparatively large public sector.
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