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The Competitive Effects of Transmission Infrastructure in the Indian Electricity Market

Nicholas Ryan

No 23106, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: India, seeking to reduce electricity shortages, set up a new power market, in which transmission constraints sharply limit trade between regions. I use confidential bidding data to estimate the costs of power supply and simulate market outcomes with more transmission capacity. I find that the returns to building transmission hinge on market conduct. Under a competitive model of supply, transmission investments roughly breakeven. Under a strategic model, the same transmission expansion increases market surplus by 19 percent, enough to justify the investment, because low-cost sellers increase supply in response to a more integrated grid.

JEL-codes: L13 L94 O13 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-com and nep-ene
Note: DEV EEE
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