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The Short-Run Approach to Long-Run Equilibrium in Competitive Markets A General Theory with Application to Peak-Load Pricing with Storage

The authors present a new formal framework for finding the long-run competitive market equilibrium through short-run equilibria by exploiting the operating policies and plant valuations. This “short-run approach” develops ideas of Boiteux and Koopmans. Applied to the peak-load pricing of electricity generated by thermal, hydro and pumped-storage plants, it gives a sound and practical method of valuing the fixed assets—in this case, the river flows and the geological sites suitable for reservoirs. Its main mathematical basis is the producer’s short-run profit maximization programme and its dual; their solutions have relatively simple forms that can greatly ease the fixed-point problem of solving for the general equilibrium. Since the optimal values (profit and cost functions) are usually nondifferentiable—this is so when there are joint costs of production such as capacity constraints—nonsmooth calculus is employed to resolve long-standing discrepancies between textbook theory and industrial reality by giving subdifferential extensions of basic results of microeconomics, including the Wong-Viner Envelope Theorem.

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Series Title
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Call Number
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Publisher
: Springer Cham.,
Collation
-
Language
English
ISBN/ISSN
978-3-319-33398-4
Classification
NONE
Content Type
text
Media Type
computer
Carrier Type
online resource
Edition
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Subject(s)
Microeconomics
Economics and Management
Energy Policy
Continuous Optimization
Specific Detail Info
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Statement of Responsibility
Other Information
Cataloger
Yudi
Source
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