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.
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 2001/02 issue of The Independent Review.
Other Independent Review articles by Vernon L. Smith | |
Summer 2020 | Classical Economics: Lost and Found |
Spring 2016 | Economic Modeling: Why the Standard Model Survives Bad Performance |