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Energy in a Bathtub: Electricity Trade between Countries with Different Generation Technologies

Author

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  • Førsund, Finn R.

    () (Dept. of Economics, University of Oslo)

Abstract

Many countries have followed a policy of being self-sufficient in electricity. However, in the last two decades exchange of electricity across borders has become more widespread, and the European Union's policy is to encourage a gradual expansion of crossborder trading and integration of electricity markets. It is therefore of interest to study what happens with the price formation in home markets when borders are opened up for trade in electricity and generating technologies differ. There is a common international market, Nord Pool, between the Nordic countries since 1996, and trade now takes place between many European countries on a bilateral basis. A stylised general equilibrium model of trade of electricity between two countries; Hydro and Thermal, with hydro and thermal technologies, is used to investigate price and quantity consequences going from autarky to trade in a competitive market, as revealed by using a social planning perspective for cooperation between countries.

Suggested Citation

  • Førsund, Finn R., 2009. "Energy in a Bathtub: Electricity Trade between Countries with Different Generation Technologies," Memorandum 17/2009, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2009_017
    as

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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2009/Memo-17-2009.pdf
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    References listed on IDEAS

    as
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    4. von der Fehr, Nils-Henrik M & Sandsbraten, Lise, 1997. " Water on Fire: Gains from Electricity Trade," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(2), pages 281-297, June.
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    More about this item

    Keywords

    Electricity; hydropower; thermal power; international trade;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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