Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/226816
Authors: 
Baake, Pio
Schwenen, Sebastian
von Hirschhausen, Christian R.
Year of Publication: 
2020
Series/Report no.: 
DIW Discussion Papers No. 1904
Abstract: 
In current power markets, the bulk of electricity is sold wholesale and transported to consumers via long-distance transmission lines. Recently, decentralized local power markets have evolved, often as isolated networks based on solar generation. We analyze strategic pricing, investment, and welfare in local power markets. We show that local power markets with peer-to-peer trading are competitive and provide efficient investment incentives, even for a small number of participating households. We identify positive network externalities that make larger markets more attractive but lead to inefficiencies where networks compete. Collectively, our results present a set of positive efficiency results for peer-to-peer electricity markets.
Subjects: 
Market Design
Networks
Peer-to-Peer Markets
Electricity
JEL: 
D16
D26
D47
L94
Document Type: 
Working Paper

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