The Competitive Role of the Transmisión System in Price-regulated Power Industries

M. Soledad Arellano and Pablo Serra

No 214, Documentos de Trabajo from Centro de Economía Aplicada, Universidad de Chile

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: 2005
New Economics Papers: this item is included in nep-com, nep-ene and nep-mic
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Related works:
Journal Article: The competitive role of the transmission system in price-regulated power industries (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:edj:ceauch:214

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