Assessing welfare impact of entry into power market

Inkoo Cho and Hyunsook Kim

Energy Policy, 2013, vol. 61, issue C, 1046-1054

Abstract: This paper calculates the welfare impact of a new entrant based on the location of entry in the Korean electricity market. We use two different models. One is the optimal fuel mix model to estimate the effect of a new entry in the long run. The other is the variable cost minimization model to assess the contribution of an existing installed private generator in the short run. A specific private generator, which has a cost advantage, saves a substantial amount of system-wide variable costs. We show that the right location for a new entrant can save power generation costs significantly, even if a new entrant does not have a cost advantage.

Keywords: Entry; Network constraint; Social welfare (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:61:y:2013:i:c:p:1046-1054

DOI: 10.1016/j.enpol.2013.05.124

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