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dc.contributor.authorBILLETTE DE VILLEMEUR, Etienne
dc.contributor.authorVINELLA, Annalisa
dc.date.accessioned2008-07-29T13:14:09Z
dc.date.available2008-07-29T13:14:09Z
dc.date.issued2008
dc.identifier.issn1028-3625
dc.identifier.urihttp://hdl.handle.net/1814/9127
dc.descriptionFlorence School of Regulationen
dc.description.abstractWe explore the interactions between environmental externalities and intertemporal market power in electricity generation industries where thermal operators imperfectly compete with operators using scarce water stored in dams. Relying upon a two-period model, we show that, in countries where demand peaks at the first (resp.ly, second) period after water renewal, dynamic market power worsens (resp.ly, ameliorates) resource allocation and environmental health. We then address policy issues. We show that, in general, second best is not decentralized by means of standard tools such as price cap. We argue that the hydraulic process requires specific regulation. We put forward a quantity-based version of the contracts for price difference increasingly used in power pools, to be adopted jointly with either a flexible form of taxation or an intertemporal price cap.en
dc.format.mimetypeapplication/pdf
dc.language.isoenen
dc.relation.ispartofseriesEUI RSCASen
dc.relation.ispartofseries2008/27en
dc.relation.ispartofseriesFlorence School of Regulationen
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subjectpower generationen
dc.subjectwater allocationen
dc.subjectexternalitiesen
dc.subjectprice capen
dc.subjectcontracts for water differenceen
dc.titleWater Misallocation and Environmental Externalities in Electricity Generationen
dc.typeWorking Paperen
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