Efficient Market Design and Public Goods, Part II: Theoretical Results

TitleEfficient Market Design and Public Goods, Part II: Theoretical Results
Publication TypeJournal Article
Year of Publication2010
AuthorsDavid Toomey, William D Schulze, Robert J Thomas, James S Thorp, Daniel J Tylavsky, Richard E Schuler
JournalInternational Journal of Emerging Electric Power Systems
Date Published01/2010
KeywordsCERTS, electricity markets, market design, power system economics, reliability and markets

Electric power is traditionally comprised of valued services, including real and reactive power, voltage, frequency and reliability in its most general sense. In this second part of our two-part paper we show mathematically that of these, only real and reactive power are purely private goods, in that power consumed by one customer cannot be used by another and customers can be excluded from receiving any power. The other ancillary services, including voltage, frequency and reliability are shown to be public goods. The first order conditions presented clearly illustrate that the public goods occurring in electric power systems comprise a significant problem for market design.