A pricing mechanism to jointly mitigate market power and environmental externalities in electricity markets

Lamia Varawala, Mohammad Reza Hesamzadeh, György Dán, Derek Bunn y Juan Rosellón, Profesor Investigador Titular de la División de Economía del CIDE, escribieron A pricing mechanism to jointly mitigate market power and environmental externalities in electricity markets, artículo publicado en la revista Energy Economics.   Abstract The electricity industry has been one of the first to face technological changes motivated by sustainability concerns. Whilst efficiency aspects of market design have tended to focus upon market power concerns, the new policy challenges emphasise sustainability. We argue that market designs need to develop remedies for market conduct integrated with regard to environmental externalities. Accordingly, we develop an incentive-based market clearing mechanism using a power network representation with a distinctive feature of incomplete information regarding…

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