Substitution between Bundled and Unbundled Products after Deregulation in Electricity Generation
AbstractWith partial electric utility deregulation, regulators will continue to regulate transmission and distribution (T&D) rates, while generation prices are unregulated and stochastic. Consumers will migrate between bundled and unbundled rate classes depending on individual rates of trade-off between generation price and generation price variance. In the linear pricing case, with large variance and increasing returns to scale, the unbundled class should have the lower T&D price. In a non-linear (two-part rates) stochastic model, the per unit rates of both bundled and unbundled classes should be set less than marginal cost.
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Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 26 (2000)
Issue (Month): 4 (Fall)
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Find related papers by JEL classification:
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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