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Ramsey Pricing in a Congested Network with Market Power in Generation: A Numerical Illustration for Belgium

Author

Listed:
  • Guido Pepermans

    (K.U.Leuven-Center for Economic Studies)

  • Bert Willems

    (K.U.Leuven-Center for Economic Studies)

Abstract

This paper derives the socially optimal transmission prices in a congested electricity network when there is imperfect competition in generation, and when the budget constraint of the network operator is binding. The results which we derive are a generalization of the standard Ramsey prices and also of the locational marginal prices (LMP). The model is illustrated with a numerical model based on the Belgian electricity data.

Suggested Citation

  • Guido Pepermans & Bert Willems, 2004. "Ramsey Pricing in a Congested Network with Market Power in Generation: A Numerical Illustration for Belgium," Energy, Transport and Environment Working Papers Series ete0408, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    • Handle: RePEc:ete:etewps:ete0408
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    References listed on IDEAS

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    Cited by:

    1. Guido Pepermans & Bert Willems, 2005. "The Potential Impact of Cross-Ownership in Transmission: an Application to the Belgian Electricity Market," Working Papers of Department of Economics, Leuven ces0503, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.

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    More about this item

    Keywords

    Regulation; Transmission; Electricity; Cournot; Numerical model; Security constraints; MPEC; loadflow; Belgium;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation

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