Barring consumers from the electricity network might improve welfare
A monopolist supplies a homogenous good to two geographically separated markets. Production costs and demand conditions are di?erent in each market. A line with a limited transport capacity connects both markets. The paper compares two institutional frameworks: (1) exclusive access to the line is granted to the monopolist (2) access to the line is auctioned to the monopolist and consumers. It derives the monopolist's strategy, and illustrates the result with examples. In general, it is not clear-cut which regime gives the highest total surplus. For linear demand functions exclusive access is superior to auctioning, if transport capacity is small, cost differences are large and demand conditions similar.
|Date of creation:||Dec 2002|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +32-(0)16-32 67 25
Fax: +32-(0)16-32 67 96
Web page: http://www.econ.kuleuven.be/ew/academic/energmil
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ete:etewps:ete0213. 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: (Isabelle)The email address of this maintainer does not seem to be valid anymore. Please ask Isabelle to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.