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Research Details

What Drives Market Integration?: Evidence from the Electric Power Market

Abstract

The U.S. wholesale market for electric power demonstrates the role of mobility of goods and their factors in the integration of a market. The integration of the power market follows the deregulation of generation during the period 2001{2012. Day-ahead wholesale prices at trading hubs across the country reveal a downward trend in dispersion and an increase in variance explained by the common component through the sample. Engineering limitations preventing the ow of electricity across regions, suggests this integration came despite limited good mobility. Utilizing Engel and Rogers (1996) type regressions, we provide an empirical measure of this barrier, and find this barrier to be small. We conclude that the regional wholesale markets are becoming integrated despite physical barriers to trade in output markets.

Type

Working Paper

Author(s)

Daniel Spulber, R Andrew Butters

Date Published

2015

Citations

Spulber, Daniel, and R Andrew Butters. 2015. What Drives Market Integration?: Evidence from the Electric Power Market.

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