Price-elastic demand in deregulated electricity markets

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Title: Price-elastic demand in deregulated electricity markets
Authors: Siddiqui, Afzal S.
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Date: 30-Apr-2004
Abstract: The degree to which any deregulated market functions efficiently often depends on the ability of market agents to respond to fluctuating conditions. Many restructured electricity markets, however, have little demand response. We examine the implications for market operations when a risk-averse retailer's end-use consumers are allowed to perceive real-time variations in the electricity price. Using a market -equilibrium model, we find that price elasticity both increases the retailer's revenue risk exposure and decreases the spot price. Consequently, the overall impact of price- responsive demand on the electricity forward price is ambiguous.
Type of material: Working Paper
Publisher: University College Dublin. School of Business. Centre for Financial Markets
Copyright (published version): 2004, Centre for Financial Markets
Keywords: Price-elastic demandElectricity deregulationForward contracts
Subject LCSH: Elasticity (Economics)
Electric utilities--Deregulation
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Language: en
Status of Item: Not peer reviewed
Appears in Collections:Centre for Financial Markets Working Papers

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