Redistribution Through Efficiency: Theory and Evidence from Three Electricity Markets
Abstract
ABSTRACT Using micro‐data on over 160 million bids to buy and sell from three major electricity markets, we study efficiency improvements resulting from technologies such as storage. Consumer benefits arise not from stabilized prices but from changes in general price levels. To unpack the findings, we develop a set of price‐theory results, demonstrating that the convexity of market excess demand, derived from the bids, serves as a novel measure that strongly predicts consumer benefits across all markets. This analysis highlights that even small allocative improvements can lead to significant redistributions of surplus, ultimately benefitting consumers.
Fields of Study & Subjects
Electric Power System Optimization
Auction Theory and Applications
ICT Impact and Policies
Publication details
- Journal / source
- The RAND Journal of Economics
- Publisher
- Wiley
- Volume
- 57
- Issue
- 1
- Pages
- 225–244
- Publication date
- 1 March 2026
- Language
- EN