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The competitive role of the transmission system in price-regulated power industries

M. Soledad Arellano and Pablo Serra ()

Energy Economics, 2008, vol. 30, issue 4, 1568-1576

Abstract: This note shows how the transmission system can enhance competition in price-regulated power industries, thus extending earlier findings reported in the literature for deregulated industries. In the context of a two-technology, price-regulated power industry, we show that the interconnection of two markets initially supplied by a different monopoly reduces market power and raises welfare. We also show that the capacity of the transmission line plays a key role in determining whether market equilibrium lies closer to competition or monopoly.

Date: 2008
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Working Paper: The Competitive Role of the Transmisión System in Price-regulated Power Industries (2005) Downloads
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