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What Does the Evidence Really Say about the Residual Supply Index?

Oscar Arnedillo

The Electricity Journal, vol. 24, issue 1, 57-64

Abstract: A review of an econometric analysis relating the hourly Residual Supply Index to price-cost margins in the major EU electricity generation markets suggests that its predictive abilities may have been the result of modeling errors and that the RSI is, in fact, an irrelevant explanatory factor for markups. This detailed critique is followed by a response from the original author and further debate.

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