Electricity prices and cross-border trade: Volume and strategy effects
In this paper we derive equilibrium bid functions in isolated domestic electricity markets and then analyse their modifications when cross-border trade among them is managed using the implicit auction method. We show that cross-border trade can induce price convergence across countries and thereby reallocate gains and losses as a result of two concomitant effects: a "volume" effect due to the mere increase/decrease of demand and supply in each market and a "bid effect" due to the modifications of bid functions brought about by interconnection. The latter effect can either contrast or reinforce the former. We derive conditions affecting the net result.
Year of publication: |
2008
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Authors: | Parisio, Lucia ; Bosco, Bruno |
Published in: |
Energy Economics. - Elsevier, ISSN 0140-9883. - Vol. 30.2008, 4, p. 1760-1775
|
Publisher: |
Elsevier |
Saved in:
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