Demand-Side Bidding Will Reduce the Level and Volatility of Electricity Prices
By Stephen J. Rassenti
Vernon L. Smith

Bart J. Wilson

This article appeared in the Winter 2002 issue of The Independent Review


If the motel industry runs more smoothly because motel room prices are free to fluctuate in response to changes in demand, why not let retail energy prices operate freely, too? Laboratory simulations of electricity markets support the economic intuition that market pricing would stabilize and lower energy prices.

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