The evolution of utility rates in Russia: an institutional-historical digression

The article examines the theoretical justifications and rules for setting tariffs, which, even in theory, cannot be unambiguously identified to ensure the optimal use of resources by public utilities. In fact, in the absence of a generally accepted theory of state policy for regulating prices and tariffs, it is difficult to make general recommendations to the government, which should determine the utility pricing policy. To demonstrate this, the author proposes to begin with a brief review of the criticisms of the simple marginal cost rule during the early transition to a market economy. According to the author, such a historical approach will provide a basis for demonstrating perhaps less well-known (but no less crucial) analytical shortcomings of the two-rate tariff rule, both in its simple form and in the form of a modified club principle. In conclusion, the broad implications of all these arguments for the state policy of prices and tariffs from the point of view of institutional transformations of socio-economic security are identified.
The results of the study may be in demand by legislative and executive authorities in ensuring socio-economic security in the context of utility rate regulation.

institutional transformation, socio-economic security, rate, utility, tariff regulation