DocumentCode :
1248684
Title :
Artificial power markets and unintended consequences
Author :
Jacobs, Jonathan M.
Author_Institution :
Pacific Gas & Electr. Co., San Francisco, CA, USA
Volume :
12
Issue :
2
fYear :
1997
fDate :
5/1/1997 12:00:00 AM
Firstpage :
968
Lastpage :
972
Abstract :
Administrative pricing rules that try to mimic economic equilibria often fail to capture the complexity of real markets, and in that failure can distort incentives as much as or more than cost-based pricing. In this paper, the authors provide three examples of the failure of administrative mechanisms meant to mimic a market. Two of those examples are very relevant to current debates over industry restructuring. In each case, the pricing rule fails to maximize social welfare even though (in the last two examples) production cost is minimized
Keywords :
costing; economics; electricity supply industry; tariffs; administrative mechanisms; administrative pricing rules; artificial power markets; cost-based pricing; economic equilibria; electric power industry; production cost; social welfare; Centralized control; Costs; Jacobian matrices; Power generation economics; Power markets; Power system economics; Power system modeling; Pricing; Production; Technological innovation;
fLanguage :
English
Journal_Title :
Power Systems, IEEE Transactions on
Publisher :
ieee
ISSN :
0885-8950
Type :
jour
DOI :
10.1109/59.589794
Filename :
589794
Link To Document :
بازگشت