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Restructured Electricity Markets: Competition and Regulation with Environmental and Development Goals

16th National Competition for Economic Research Grants

Industrial economics and regulation

Senior Researcher : Raúl Bajo Buenestado

Research Centre or Institution : Universidad de Navarra. Pamplona.

Abstract

In this project I focus on four main lines of research. In the first line of research, I study firms’ incentives to invest in capacity in the presence of market regulation. I show that, in some particular industries, the presence of regulated capacity leads to “first-best” solution (increases market efficiency). In the second line of research, I study the so-called Operating Reserve Demand Curves (ORDCs), as an alternative regulatory framework for electricity markets to guarantee “enough” generation capacity in the system. I show that in a relatively unreliable power market (due to the presence of substantial intermittent generation), the ORDCs improves the reliability of the system..

In the third line of research, I study the incentives for investment in distributed generation (mainly in solar panels). To do so, I analytically develop a model of bilateral markets, in which agents can buy, sell, or do both. Using this model, I derive the consequences of several policies that promote the installation of domestic solar panels. Finally, in the fourth line of research, I study the impact of firms’ investment (or lack thereof) in the energy sector and in the extractive sector in developing countries. In particular, I focus on two different (yet related) projects. First, I empirically challenge the main hypothesis supported by Nunn (2007) (Quarterly Journal of Economics): countries with more developed judicial systems have a comparative advantage and, therefore, are able to attract industries for which relationship-specific assets are most necessary. Second, I use a dataset obtained from a household-level survey conducted in Kenya, to study the impact of the lack of reliability of the electricity grid (due to lack on investment in maintenance) on households’ demand for electricity connections.

 

Scientific Production
 
Magazine Articles 3
Communications at national conferences 2
Communications at international conferences 6

 

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