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Water on Fire: Gains from Electricity Trade

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  • von der Fehr, Nils-Henrik M
  • Sandsbraten, Lise

Abstract

In light of the ongoing liberalization of electricity in the Nordic countries, and perhaps in Northern Europe, the authors argue that gains from electricity trade may be different from those traditionally associated with comparative advantages and economies of scale. In particular, they consider gains arising from the exploitation of technological complementarities between hydro and thermal systems. The authors' theoretical framework highlights essential features of the two systems and allows for an analysis of effects of trade. They study three trading regimes, which may arise either endogenously or because of trade regulations: day-night power exchange, seasonal energy banking and unbalanced trade. The analysis suggests that gradual trade liberalization may be costly. Copyright 1997 by The editors of the Scandinavian Journal of Economics.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 99 (1997)
Issue (Month): 2 (June)
Pages: 281-97

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Handle: RePEc:bla:scandj:v:99:y:1997:i:2:p:281-97

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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Cited by:
  1. Billette de Villemeur, Etienne & Pineau, Pierre-Olivier, 2012. "Regulation and electricity market integration: When trade introduces inefficiencies," MPRA Paper 41251, University Library of Munich, Germany.
  2. Haddad, Mohamed S., 2011. "Capacity choice and water management in hydroelectricity systems," Energy Economics, Elsevier, vol. 33(2), pages 168-177, March.
  3. Birte Pohl & Peter Mulder, 2013. "Explaining the Diffusion of Renewable Energy Technology in Developing Countries," GIGA Working Paper Series 217, GIGA German Institute of Global and Area Studies.
  4. Mulder, Peter & de Groot, Henri L. F. & Hofkes, Marjan W., 2003. "Explaining slow diffusion of energy-saving technologies; a vintage model with returns to diversity and learning-by-using," Resource and Energy Economics, Elsevier, vol. 25(1), pages 105-126, February.
  5. Aune,F.R. & Golombek,R. & Kittelsen,S.A.C. & ..., 2001. "Liberalising the energy markets of Western Europe : a computable equilibrium model approach," Memorandum 14/2001, Oslo University, Department of Economics.
  6. DAKHLAOUI Ahlem, 2007. "Dynamic games in the wholesale electricity market," LERNA Working Papers 07.21.242, LERNA, University of Toulouse.
  7. DAKHLAOUI Ahlem & MOREAUX Michel, 2007. "Trade-off between Hydro and Thermal Power Generation under Uncertainty," LERNA Working Papers 07.13.234, LERNA, University of Toulouse.

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