Gains from Trade under Uncertainty: The Case of Electric Power Markets
This article refocuses attention on the potential efficiency gains from competitive wholesale power trading, which allows the diversification of demand risk. The greatest efficiency gains obtain when power demand is least correlated across markets and when there is substantial cross-sectional variation in expected demand. Real-time power trading can reduce retail prices by conservative estimates of 3%–4% on average in the United States, and forward and real-time trading can reduce prices by a combined 6%–10% or more. Economic efficiency would be best served by policy ensuring that deregulated power markets are indeed competitive, rather than by renewed regulation.
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.
When requesting a correction, please mention this item's handle: RePEc:ucp:jnlbus:v:79:y:2006:i:4:p:1755-1782. 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: (Journals Division)
If references are entirely missing, you can add them using this form.