New article in Journal of Regulatory Economics
Associate professor Anette Boom has published an article in Journal of Regulatory Economics. The joint article with Sebastian Schwenen deals with electricity pricing in a setting where there is potentially imperfect competition on the electricity wholesale market and perfect competition on the electricity retail market . In the chosen setting it shows that increasing the number of consumers on real-time pricing increases welfare and consumer surplus of both types of consumers, those who are on traditional fixed price contracts and those who are on real-time pricing. Yet, risk averse consumers on traditional time invariant retail prices are always better off when staying on these contracts instead of switching to real time pricing. These results point to a public good nature of demand response in power markets when consumers are risk averse.
The article can be accessed by using the following link: