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Redistribution Through Efficiency: Theory and Evidence from Three Electricity Markets

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  • Matti Liski
  • Iivo Vehviläinen

Abstract

Using micro‐data on over 160 million bids to buy and sell from three major electricity markets, we study efficiency improvements resulting from technologies such as storage. Consumer benefits arise not from stabilized prices but from changes in general price levels. To unpack the findings, we develop a set of price‐theory results, demonstrating that the convexity of market excess demand, derived from the bids, serves as a novel measure that strongly predicts consumer benefits across all markets. This analysis highlights that even small allocative improvements can lead to significant redistributions of surplus, ultimately benefitting consumers.

Suggested Citation

  • Matti Liski & Iivo Vehviläinen, 2026. "Redistribution Through Efficiency: Theory and Evidence from Three Electricity Markets," RAND Journal of Economics, RAND Corporation, vol. 57(1), pages 225-244, March.
    • Handle: RePEc:bla:randje:v:57:y:2026:i:1:p:225-244
    DOI: 10.1111/1756-2171.70048
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