Electricity prices and cross-border trade: Volume and strategy effects

Lucia Parisio () and Bruno Bosco

Energy Economics, 2008, vol. 30, issue 4, pages 1760-1775

Abstract: 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.

Downloads: (external link)
http://www.sciencedi ... 240fc9bf6c63e725ff55
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Electricity prices and cross-border trade: volume and strategy effects (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this article

Energy Economics is edited by R. S. J. Tol and J. P. Weyant

More articles in Energy Economics from Elsevier
Series data maintained by Heidi Boesdal ().