Demand Elasticity in the California Power Exchange Day-Ahead Market
✍ Scribed by Robert L Earle
- Publisher
- Elsevier Science
- Year
- 2000
- Tongue
- English
- Weight
- 284 KB
- Volume
- 13
- Category
- Article
- ISSN
- 1040-6190
No coin nor oath required. For personal study only.
✦ Synopsis
The price elasticity of demand in the California PX is significantly greater than what theory might predict. A structurally induced elasticity in the day-ahead market limits the degree to which a supplier can profitably withhold within that market.
Robert L. Earle
he responsiveness of demand to price is generally thought to be very low in electric power markets. That is, the elasticity of demand is often thought to range from zero in real-time markets (no response) to about 0.1 to 0.3 in medium-to long-term retail settings. Few studies have been available of the price elasticity of demand in wholesale electricity markets. This article examines the price elasticity of demand in the California Power Exchange's dayahead market and finds that there is a surprising amount of elasticity. In particular, the elasticity of demand is greater than 1.0 in 27 percent of hours.