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Contracting for the Second Best in Dysfunctional Electricity Markets / Nikandrova, Arina
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Nikandrova, Arina
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Electricity Trade.
- Energy.
- Energy Production and Transportation.
- Energy Technology and Transmission.
- Infrastructure Economics.
- Infrastructure Economics and Finance.
- Macroeconomics and Economic Growth.
- Political Economy.
- Power & Energy Conversion.
- Risk Sharing Arrangements.
- Self-Enforcing Contracts.
- Local Subjects:
- Electricity Trade.
- Energy.
- Energy Production and Transportation.
- Energy Technology and Transmission.
- Infrastructure Economics.
- Infrastructure Economics and Finance.
- Macroeconomics and Economic Growth.
- Political Economy.
- Power & Energy Conversion.
- Risk Sharing Arrangements.
- Self-Enforcing Contracts.
- Physical Description:
- 1 online resource (40 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2014
- System Details:
- data file
- Summary:
- Power pools constitute a set of sometimes complex institutional arrangements for efficiency-enhancing coordination among power systems. Where such institutional arrangements do not exist, there still can be scope for voluntary electricity-sharing agreements among power systems. This paper uses a particular type of efficient risk-sharing model with limited commitment to demonstrate that second-best coordination improvements can be achieved with low to moderate risks of participants leaving the agreement. In the absence of an impartial market operator who can observe fluctuations in connected power systems, establishing quasi-markets for trading excess electricity through the kind of mechanism described here helps achieve sustainable cooperation in mutually beneficial electricity sharing.
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