Demande active sur les marchés électriques: une analyse expérimentale de l'efficacité du mécanisme de retrait de capacités demandées

Céline Jullien, Stephen Rassenti and Abel Winn

Economie & Prévision, 2008, vol. n° 182, issue 1, 61-76

Abstract: This paper presents an experimental investigation of the effects of a demand-response mechanism on the efficiency of competitive wholesale electric-power markets. Under most electricity deregulation, attention has initially and exclusively been placed on the supply side of the industry. Demand has been assumed to be largely inelastic and therefore not calling for specific incentive mechanisms. As a consequence, many power markets turned out to be organized using one-sided auctions with diverse and sometimes embarrassing market performances a decade after the first deregulation. This suggests that the foundations of power-market designs should be re-examined. Many regulators are now integrating the demand side of the industry into their power markets, searching for efficient demand-response mechanisms. Earlier experimental studies have shown the significance of demand-side bidding in electric-power markets. Our article presents a series of experiments designed to test a simple demand-response mechanism in the form of demand withdrawals, as proposed by the Australian authorities. The results show that although the mechanism leads to significant reductions in market prices in peak-demand periods, it fosters gaming strategies that suggest it might perform poorly in the field.

Keywords: demand response; electric-power markets; experimental economics; market design (search for similar items in EconPapers)
Date: 2008
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Journal Article: Demande active sur les marchés électriques: une analyse expérimentale de l'efficacité du mécanisme de retrait de capacités demandées (2008)
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