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Class Year

2011

Abstract

Electricity transmission is subject to distribution losses and congestion costs. Economists have prior theorized that these transmission imperfections could create divided markets with electricity generating spatial oligopolists. This concern has been largely dismissed because of recent technological advances in electricity transmission. The effects of local technological and demographic indicators on electricity transmission costs remains both commonly accepted as negligible and spatially untested. This analysis employs a spatially lagged local estimation of New England’s marginal electricity losses with respect to both technological and demographic indicators. The results of this analysis are consistent with the widely accepted notion that technological advances have mitigated the effect of local distribution losses and local congestion costs on electricity prices.

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