Structural analysis of electricity demand and supply interactions

Fezzi, Carlo and Bunn, Derek (2010) Structural analysis of electricity demand and supply interactions. Oxford Bulletin of Economics and Statistics, 72 (6). pp. 827-856. ISSN 1468-0084

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We specify a structural asymmetric vector error-correction model to identify and estimate the demand and supply functions in hourly day-ahead wholesale electricity markets. In doing so, we provide, inter alia, new insights into a well-established but unresolved issue concerning the extent of the demand elasticity to price in these markets. We show that whilst demand appears to be inelastic in the short-run, the quantity traded on the market is significantly influenced by the price level and responds to previous disequilibria in the supply curve through an asymmetric error-correction mechanism, reacting to a positive disequilibrium but not to a negative one.

Item Type: Article
Faculty \ School: Faculty of Science > School of Environmental Sciences
UEA Research Groups: Faculty of Science > Research Centres > Centre for Social and Economic Research on the Global Environment (CSERGE)
Faculty of Science > Research Groups > Resources, Sustainability and Governance (former - to 2018)
Depositing User: Rosie Cullington
Date Deposited: 02 Feb 2011 15:56
Last Modified: 23 Oct 2022 01:26
DOI: 10.1111/j.1468-0084.2010.00596.x

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