Barring consumers from the electricity network might improve welfare
AbstractA monopolist supplies a homogenous good to two geographically separated markets. Production costs and demand conditions are di?erent in each market. A line with a limited transport capacity connects both markets. The paper compares two institutional frameworks: (1) exclusive access to the line is granted to the monopolist (2) access to the line is auctioned to the monopolist and consumers. It derives the monopolist's strategy, and illustrates the result with examples. In general, it is not clear-cut which regime gives the highest total surplus. For linear demand functions exclusive access is superior to auctioning, if transport capacity is small, cost differences are large and demand conditions similar.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment in its series Energy, Transport and Environment Working Papers Series with number ete0213.
Length: 34 pages
Date of creation: Dec 2002
Date of revision:
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Electricity; Monopoly; Transmission; Congestion; Price discrimination; Unbundling; Deregulation;
Find related papers by JEL classification:
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
- L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-12-09 (All new papers)
- NEP-COM-2002-12-09 (Industrial Competition)
- NEP-ENE-2002-12-09 (Energy Economics)
- NEP-IND-2002-12-09 (Industrial Organization)
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- Kupper, G. & Willems, Bert, 2007.
"Arbitrage in Energy Markets: Competing in the Incumbent's Shadow,"
2007-034, Tilburg University, Tilburg Law and Economic Center.
- Kupper, G. & Willems, Bert, 2007. "Arbitrage in Energy Markets: Competing in the Incumbent's Shadow," Discussion Paper 2007-094, Tilburg University, Center for Economic Research.
- Kupper Gerd & Willems Bert, 2007. "Arbitrage in Energy Markets: Competing in the Incumbent’s Shadow," Energy, Transport and Environment Working Papers Series ete0707, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
- Gerd Küpper & Bert Willems, 2007. "Arbitrage in energy markets: competing in the incumbent's shadow," Center for Economic Studies - Discussion papers ces0730, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- Guido Pepermans & Bert Willems, 2004. "Ramsey Pricing in a Congested Network with Market Power in Generation: A Numerical Illustration for Belgium," Energy, Transport and Environment Working Papers Series ete0408, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
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