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DEREGULATING THE DISTRIBUTION OF ELECTRICITY: PRICE AND WELFARE CONSEQUENCES OF SPATIAL OLIGOPOLY WITH UNIFORM DELIVERED PRICES *
Author(s) -
Hobbs Benjamin F.,
Schulert Richard E.
Publication year - 1986
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1986.tb00819.x
Subject(s) - oligopoly , competition (biology) , economics , mains electricity , welfare , electricity , distribution (mathematics) , microeconomics , franchise , electricity price , supply , industrial organization , business , market economy , power (physics) , ecology , mathematical analysis , business administration , physics , mathematics , quantum mechanics , electrical engineering , biology , engineering
. Theoretical, spatial oligopoly models are developed and calibrated to simulate the price and welfare consequences of deregulating the retail price of electricity (the distribution function), assuming competing sources of generation supply are available. Two types of distribution competition are considered, retaining the currently used uniform delivered pricing structure: competition for customers at neighboring utilities’ borders and franchise competition. Because duplicate facilities are required for borderline competition, short‐run price increases ranging between 14 and 37 percent over existing regulated prices are estimated for upstate New York, largely because deregulated prices reflect replacement, not historic, costs of facilities.