Trading Forward in an Imperfect Market: The Case of Electricity in Britain
The thrust of government policy in the British electricity industry has been to create a competitive and transparen t commodity market. To this end there has been a separation of supply from distribution and an independent company operates a transparent spot market, known as the pool. However, there is also a set of futu res and options-style contracts which lie over the pool that are not transparent. This paper considers the effects of the contract market on the pool. The model is an application of the theory of futures-style trading when the spot market is imperfect. However, the model is somewhat non-standard as there is no secondary trading in the contra cts and the generators may capture rents in the contract market. The results suggest several externalities due to the strategic use of th ese contracts by both the generators and the RECs which may limit the number of contracts traded. It is argued that the Office for Electricity Regulation (Offer) should intervene to help the creation of a transparent and standardized contract market. This may ensure the success of the contract market, ease entry to generation and foster competition. Copyright 1993 by Royal Economic Society.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 103 (1993)
Issue (Month): 417 (March)
|Contact details of provider:|| Postal: Office of the Secretary-General, Rm E35, The Bute Building, Westburn Lane, St Andrews, KY16 9TS, UK|
Phone: +44 1334 462479
Web page: http://www.res.org.uk/
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishers.co.uk/asp/journal.asp?ref=0013-0133|
When requesting a correction, please mention this item's handle: RePEc:ecj:econjl:v:103:y:1993:i:417:p:444-53. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.