Allocating Transmission to Mitigate Market Power in Electricity Markets

Richard Gilbert, Karsten Neuhoff () and David M Newbery

RAND Journal of Economics, 2004, vol. 35, issue 4, 691-709

Abstract: Whether transmission contracts increase or mitigate market power depends crucially on the allocation of transmission rights. In an efficiently arbitraged uniform-price auction, generators will only obtain contracts that mitigate their market power. Contracts inherited or bought in a "pay-as-bid" auction can enhance market power. In the two-node case, banning generators from holding transmission contracts not corresponding to delivery of their own energy mitigates market power. Meshed networks differ in important ways, as constrained links no longer isolate prices from market manipulation. We suggest ways of reducing market power when designing auctions and transmission contracts.

Date: 2004
References: Add references at CitEc
Citations: View citations in EconPapers (58)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rje:randje:v:35:y:2004:4:p:691-709

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().