IDEAS home Printed from
   My bibliography  Save this paper

Integrating electricity markets: Impacts of increasing trade on prices and emissions in the western United States


  • Steven Dahlke


This paper presents empirically-estimated average hourly relationships between regional electricity trade in the United States and prices, emissions, and generation from 2015 through 2018. Consistent with economic theory, the analysis finds a negative relationship between electricity prices in California and regional trade, conditional on local demand. Each 1 gigawatt-hour increase in California electricity imports is associated with an average $0.15 per megawatt-hour decrease in the California Independent System Operator's wholesale electricity price. There is a net-negative short term relationship between carbon dioxide emissions in California and electricity imports that is partially offset by positive emissions from exporting neighbors. Specifically, each 1 GWh increase in regional trade is associated with a net 70-ton average decrease in CO2 emissions across the western U.S., conditional on demand levels. The results provide evidence that electricity imports mostly displace natural gas generation on the margin in the California electricity market. A small positive relationship is observed between short-run SO2 and NOx emissions in neighboring regions and California electricity imports. The magnitude of the SO2 and NOx results suggest an average increase of 0.1 MWh from neighboring coal plants is associated with a 1 MWh increase in imports to California.

Suggested Citation

  • Steven Dahlke, 2018. "Integrating electricity markets: Impacts of increasing trade on prices and emissions in the western United States," Papers 1810.04759,, revised Oct 2019.
  • Handle: RePEc:arx:papers:1810.04759

    Download full text from publisher

    File URL:
    File Function: Latest version
    Download Restriction: no

    References listed on IDEAS

    1. Chan, H. Ron & Fell, Harrison & Lange, Ian & Li, Shanjun, 2017. "Efficiency and environmental impacts of electricity restructuring on coal-fired power plants," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 1-18.
    2. Zeileis, Achim, 2004. "Econometric Computing with HC and HAC Covariance Matrix Estimators," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 11(i10).
    3. Duncan S. Callaway & Meredith Fowlie & Gavin McCormick, 2018. "Location, Location, Location: The Variable Value of Renewable Energy and Demand-Side Efficiency Resources," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(1), pages 39-75.
    4. Carson, Richard T. & Novan, Kevin, 2013. "The private and social economics of bulk electricity storage," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 404-423.
    5. Riordan, Michael H. & Williamson, Oliver E., 1985. "Asset specificity and economic organization," International Journal of Industrial Organization, Elsevier, vol. 3(4), pages 365-378, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Beltrami, Filippo & Burlinson, Andrew & Giulietti, Monica & Grossi, Luigi & Rowley, Paul & Wilson, Grant, 2020. "Where did the time (series) go? Estimation of marginal emission factors with autoregressive components," Energy Economics, Elsevier, vol. 91(C).
    2. Gkillas, Konstantinos & Gupta, Rangan & Pierdzioch, Christian, 2020. "Forecasting realized oil-price volatility: The role of financial stress and asymmetric loss," Journal of International Money and Finance, Elsevier, vol. 104(C).
    3. Tin Cheuk Leung & Kwok Ping Ping & Kevin K. Tsui, 2019. "What can deregulators deregulate? The case of electricity," Journal of Regulatory Economics, Springer, vol. 56(1), pages 1-32, August.
    4. Chu, Yin & Chang, Chun-Ping, 2020. "Vertical separation of transmission control and market efficiency in the wholesale electricity market," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    5. Carsten Helm & Mathias Mier, 2020. "Steering the Energy Transition in a World of Intermittent Electricity Supply: Optimal Subsidies and Taxes for Renewables Storage," ifo Working Paper Series 330, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    6. Doyle, Matthew & Fell, Harrison, 2018. "Fuel prices, restructuring, and natural gas plant operations," Resource and Energy Economics, Elsevier, vol. 52(C), pages 153-172.
    7. Gamal Atallah, 2002. "Production Technology, Information Technology, and Vertical Integration Under Asymmetric Information," Working Papers 0203EClassification-JEL: , University of Ottawa, Department of Economics.
    8. Kafigi Jeje, 2020. "Risk-Taking and Performance of Small and Medium-Sized Enterprises: Lessons from Tanzanian Bakeries," Journal of Economics and Behavioral Studies, AMH International, vol. 12(3), pages 1-22.
    9. Subramanian Rangan & Metin Sengul, 2009. "Information technology and transnational integration: Theory and evidence on the evolution of the modern multinational enterprise," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(9), pages 1496-1514, December.
    10. Rudolf Cesaretti & José Lobo & Luís M A Bettencourt & Scott G Ortman & Michael E Smith, 2016. "Population-Area Relationship for Medieval European Cities," PLOS ONE, Public Library of Science, vol. 11(10), pages 1-27, October.
    11. Dahlke, Steve, 2018. "Effects of wholesale electricity markets on wind generation in the midwestern United States," Energy Policy, Elsevier, vol. 122(C), pages 358-368.
    12. Andersson, Jonas & Schroyen, Fred & Torsvik, Gaute, 2019. "The impact of international tax information exchange agreements on the use of tax amnesty: evidence from Norway," Discussion Paper Series in Economics 16/2019, Norwegian School of Economics, Department of Economics.
    13. Kajal Lahiri & Liu Yang, 2018. "Confidence Bands for ROC Curves With Serially Dependent Data," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 36(1), pages 115-130, January.
    14. Colbert, Gary J. & Spicer, Barry H., 1995. "A multi-case investigation of a theory of the transfer pricing process," Accounting, Organizations and Society, Elsevier, vol. 20(6), pages 423-456, August.
    15. Joshua Linn & Erin Mastrangelo & Dallas Burtraw, 2014. "Regulating Greenhouse Gases from Coal Power Plants under the Clean Air Act," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(1), pages 97-134.
    16. Staffan Canback, 2004. "Diseconomies of scale in large corporations: Theory and empirical analysis," Industrial Organization 0402001, University Library of Munich, Germany.
    17. Oliver E. Williamson, 2009. "Transaction Cost Economics: The Precursors," Chapters, in: Claude Ménard & Michel Ghertman (ed.), Regulation, Deregulation, Reregulation, chapter 1, Edward Elgar Publishing.
    18. Oliver E. Williamson, 2010. "Transaction Cost Economics: The Natural Progression," American Economic Review, American Economic Association, vol. 100(3), pages 673-690, June.
    19. Abajian, Alexander & Pretnar, Nick, 2021. "An Aggregate Perspective on the Geo-spatial Distribution of Residential Solar Panels," MPRA Paper 105481, University Library of Munich, Germany.
    20. Stienstra, Miranda, 2020. "The determinants and performance implications of alliance partner acquisition," Other publications TiSEM 7fdee0c2-d4d2-4f5b-95e3-2, Tilburg University, School of Economics and Management.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:1810.04759. 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: (arXiv administrators). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.