Power Flows: Transmission Lines, Allocative Efficiency, and Corporate Profits

Catherine Hausman

No 32091, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Accelerated investment in electricity transmission could reduce total costs and enhance renewable integration. I document static allocative inefficiencies induced by incomplete market integration in two major U.S. markets; these have risen over time and totaled $2 billion in 2022. I also argue that estimating firm-level impacts is important, as incumbents may have the power to block new lines and other reforms. I show that four firms would have experienced a collective $1.3 billion drop in net revenues in 2022 had the market been integrated, and there are reports of some of these firms blocking transmission projects.

JEL-codes: L94 P18 Q41 Q42 Q48 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-inv and nep-reg
Note: EEE
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