Reprint No. 186
Retail Electricity Competition
Paul Joskow and Jean Tirole, RAND Journal of Economics Vol 37, No. 4, pp. 799-815 ( Winter 2006)

We analyze a number of unstudied aspects of retail electricity competition. We first explore the implications of load profiling of consumers whose traditional meters do not permit the measurement of their real-time consumption. The combination of retail competition and load profiling does not yield the second-best prices given the non-price-responsiveness of retail consumers. We then examine the incentives that electricity retailers have to install each of two types of advanced metering equipment. Finally, we consider the implications of physical limitations on the ability of system operators to cut off individual consumers relying instead of "zonal" rationing of large groups of individual consumers.

(CEEPR Working Paper 2004-009 is an earlier version of this article)