In this paper,the trade-off between inefficient transmission forward markets (in nodal pricing regimes) and the inefficiency induced by hiding transmission constraints from the market (in zonal pricing regimes) is analyzed. First, a simple two node model formalizing the general trade-off is...

We examine welfare effects of real-time pricing in electricity markets. Before stochastic energy demand is known, competitive retailers contract with final consumers who exogenously do not have real-time meters. After demand is realized, two electricity generators compete in a uniform price...