Retail Electricity Competition

Paul Joskow and Jean Tirole

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We explore the implications of load profiling of consumers whose traditional meters do not allow for measurement of their real time consumption. We find the competitive equilibrium does not support the Ramsey two-part tariff. By contrast, when consumers are billed on real time prices and consumption, retail competition yields the Ramsey prices even when consumers can only partially respond to variations in real time prices. We then examine the incentive competitive retailers have to install one of two types of advanced metering equipment. Competing retailers overinvest in real time meters compared to the Ramsey optimum, but investment incentives are constrained optimal given load-profiling and retail competition. Finally, we consider the effects of physical limitations on the ability of system operators to cut off individual customers. Competing retailers have no incentive to determine the aggregate value of non-interruption of consumers, preferring instead to free-ride on other retailers serving the same zone.

Pages: 41
Date: 2004-05
New Economics Papers: this item is included in nep-com and nep-lam
Note: CMI44, IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.econ.cam.ac.uk/electricity/publications/wp/ep44.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.econ.cam.ac.uk/electricity/publications/wp/ep44.pdf [301 Moved Permanently]--> https://www.econ.cam.ac.uk/electricity/publications/wp/ep44.pdf)

Related works:
Journal Article: Retail electricity competition (2006)
Working Paper: Retail Electricity Competition (2006)
Working Paper: Retail Electricity Competition (2004)
Working Paper: Retail Electricity Competition (2004)
Working Paper: Retail Electricity Competition (2004)
Working Paper: Retail Electricity Competition (2004)
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:cam:camdae:0430

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().