A Comparison of Electricity Market Designs in Networks

In the real world two classes of market designs are implemented to trade electricity in transmission constrained networks. Analytical results show that in two node networks integrated market designs reduce the ability of electricity generators to exercise market power relative to separated market designs. In multi node networks countervailing effects make an analytic analysis difficult. We present a formulation of both market designs as an equilibrium problem with equilibrium constraints. We find that in a realistic network, prices are lower with the integrated market design

Network-constrained models of liberalized electricity markets: the devil is in the details

Numerical models for electricity markets are frequently used to inform and support decisions. How robust are the results? Three research groups used the same, realistic data set for generators, demand and transmission network as input for their numerical models. The results coincide when predicting competitive market results. In the strategic case in which large generators can exercise market power, the predicted prices differed significantly. The results are highly sensitive to assumptions about market design, timing of the market and assumptions about constraints on the rationality of generators. Given the same assumptions the results coincide. We provide a checklist for users to understand the implications of different modelling assumptions

International agreements on product standard: an incomplete contracting theory

We propose a theory of international agreements on product standards. The key feature of the model is that agreements are viewed as incomplete contracts. In particular, these do not specify standards for products that may arise in the future. One potential remedy to contractual incompleteness is a dispute settlement procedure (DSP) that provides arbitration in states of the world that are not covered by the ex ante agreement. We identify conditions under which a DSP can provide ex-ante efficiency gains, and examine how these gains depend on the fundamentals of the problem. Another potential remedy to contractual incompleteness is given by rigid rules, i.e. rules that are not product-specific. We argue that the nondiscrimination rule is the only rule of this kind that increases ex ante efficiency for any probability distribution over potential products. Finally we show that, under relatively weak conditions, the optimal ex-ante agreement is structured in three parts: (i) a set of clauses that specify standards for existing products; (ii) a rigid nondiscrimination rule, and (iii) a dispute settlement procedure. Although the model focuses on the case of product standards, the analysis suggests a more general incomplete-contracting theory of trade agreements.

Judging Social Welfare Policy with the Solving of the Bargaining Problem

Current analysis addresses an apparently critical issue of wealth circulation in the society. We try to play a game with the welfare- related burden of taxation. Thus, the Negotiator No.1 stands up for citizens legal and moral rights to social services. The Negotiator No.2 proceeds from the needs of citizens for the provision of public goods. Quite the opposite, the Player, hereinafter called No.3, gives the private consumption a preference over social services and public goods, i.e., the citizens-taxpayers try to reduce their income taxes to be deposited in the tax pool – a common account of negotiators No.1 and No.2. In fact, the voters-citizens in the role of Player No.3, try to fulfil their expectations about taxes by a threat to acknowledge or to reject the bargaining agreement, e.g. a welfare committee must approve a motion against high taxes by unanimous vote. The government assesses and controls the wealth circulation by poverty line parameter. We provide an evidence for claim that 50% median income is an ideal choice of poverty line within the scope of given terms and conditions.: bargaining, decision, public goods, taxation, voting

Network-constrained models of liberalized electricity markets: the devil is in the details

Numerical models for electricity markets are frequently used to inform and support decisions. How robust are the results? Three research groups used the same, realistic data set for generators, demand and transmission network as input for their numerical models. The results coincide when predicting competitive market results. In the strategic case in which large generators can exercise market power, the predicted prices differed significantly. The results are highly sensitive to assumptions about market design, timing of the market and assumptions about constraints on the rationality of generators. Given the same assumptions the results coincide. We provide a checklist for users to understand the implications of different modelling assumptions.Market power, Electricity, Networks, Numeric models, Model comparison

A Comparison of Electricity Market Designs in Networks

In the real world two classes of market designs are implemented to trade electricity in transmission constrained networks. Analytical results show that in two node networks integrated market designs reduce the ability of electricity generators to exercise market power relative to separated market designs. In multi node networks countervailing effects make an analytic analysis difficult. We present a formulation of both market designs as an equilibrium problem with equilibrium constraints. We find that in a realistic network, prices are lower with the integrated market design.