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.