Is real-time pricing smart for consumers?
Anette Boom () and
Sebastian Schwenen ()
Journal of Regulatory Economics, 2021, vol. 60, issue 2, No 5, 193-213
Abstract We examine the effects of real-time pricing on welfare and consumer surplus in electricity markets. We model consumers on real-time pricing who purchase electricity on the wholesale market. A second group of consumers contracts with retailers and pays time-invariant retail prices. Electricity generating firms compete in supply functions. Increasing the number of consumers on real-time pricing increases welfare and consumer surplus of both types of consumers. Yet, risk averse consumers on traditional time-invariant retail prices are always better off. Collectively, our results point to a public good nature of demand response in power markets when consumers are risk averse.
Keywords: Electricity; Real-time pricing; Market power; Efficiency (search for similar items in EconPapers)
JEL-codes: D42 D43 D44 L11 L12 L13 (search for similar items in EconPapers)
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Working Paper: Is Real-time Pricing Smart for Consumers? (2020)
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