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Bringing in Liquidity and Transparency when the Power Sector is Consolidated: The Duty to Trade on the Power Exchange

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  • Mariusz Swora
  • Jacek KamiÅ„ski

Abstract

The present model analyses how the state would provide services when the change of power depends upon the performance of the state. Agents can evaluate state performance based either only on the receipt of government services, or both on the benefit from government services and taxes imposed. With a credible threat of power change, if the valuation of the government services is low, along with a low fiscal capacity, then it is less probable that this service would be provided. Furthermore, such an allocation is compared with a situation, when there exists a threat of active opposition. Interestingly, that threat does not change the optimum provisioning of government services (as compared to the previous situation) in the equilibrium.

Suggested Citation

  • Mariusz Swora & Jacek KamiÅ„ski, 2017. "Bringing in Liquidity and Transparency when the Power Sector is Consolidated: The Duty to Trade on the Power Exchange," Review of Economics and Institutions, Università di Perugia, vol. 8(1).
  • Handle: RePEc:pia:review:v:8:y:2017:i:1:n:3
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    References listed on IDEAS

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    1. Christian Schultz, 2005. "Virtual Capacity and Competition," CESifo Working Paper Series 1487, CESifo Group Munich.
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    More about this item

    Keywords

    market failure; transparency; power exchange;

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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