Contracting for the second best in dysfunctional electricity markets

Power pools constitute a set of sometimes complex institutional arrangements for efficiency-enhancing coordination among power systems. In many developing countries, where such institutional arrangements can’t be established over the short term, there still can be scope for voluntary electricity-sha...

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Bibliographic Details
Published in:Journal of regulatory economics 2017-02, Vol.51 (1), p.41-71
Main Authors: Nikandrova, Arina, Steinbuks, Jevgenijs
Format: Article
Language:English
Subjects:
Costs
Developing countries
Economics
Economics and Finance
Electric power
Electricity
Electricity distribution
Industrial Organization
Industrialized nations
Infrastructure
LDCs
Marginal pricing
Microeconomics
Nuclear reactors
Original Article
Power marketers
Power supply
Public Finance
Regions
Risk sharing
Citations: Items that this one cites
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Summary:Power pools constitute a set of sometimes complex institutional arrangements for efficiency-enhancing coordination among power systems. In many developing countries, where such institutional arrangements can’t be established over the short term, there still can be scope for voluntary electricity-sharing agreements among power systems. Using a particular type of efficient risk-sharing model with no commitment we demonstrate that second-best coordination improvements can be achieved with low to moderate risks of participants leaving the agreement. In the absence of an impartial market operator who can observe production fluctuations in connected power systems, establishing quasi-markets for trading excess electricity helps to achieve some cooperation in mutually beneficial electricity sharing.
ISSN:0922-680X
1573-0468
DOI:10.1007/s11149-016-9313-7