The Research On Electricity Market And Its Institution

It is a bran-new cause of electricity market reform. In order to make a great success of it, the essential of reform should be discovered and correctly understood. This paper bases on the theory and practice status quo, does a further research on the electricity market and expands the meaning of it from the aspect of depth and scope. By doing this, the more integrated new picture of electricity market is presented. This paper firstly studies the methodology meaning of electricity market. The variability of world and the bounded rationality of human are described. It points out that theory is an approximation of reality, and there isn't any absolute objective law that controls the world. Market is the embodiment of scientific methodology in economic activities, and it is a very good error-correction mechanism. Market participants could checkout economic decisions and make a pareto improvement in efficiency. On the other hand, the command economy is non-scientific, which directly provides optimal resource distribution methods that usually couldn't be checked out by individual practice. It is also believed that the establishment of market should be directed by scientific methodology. The economic meaning of market is also been analyzed. This paper points out that market is a effective means which could improve economic efficiency, and at the same time, it is also the progress objective itself. Market is better than command, it can encourage the enhancement of long term investment efficiency and innovation efficiency; when the short term efficiency is concerned, this isn't the strong point of market, but it can overcome the evil consequence of plan. This paper also points out that most of electricity market design depart investment efficiency and innovation efficiency severely nowadays and wastes too much time and money on short term efficiency. This paper expands the extension of electricity market from the perspective of new institutional economy. Institutions not only are the competition rule of market participants, but also influence the efficiency of market competition. The main purpose of institution is to complete the error-correction mechanism of market. However, to find the second-order arrangement is the other purpose that is not so important. Based on the analysis of market failure and characteristics of electricity market, this paper puts forward the institution framework of electricity market, namely property institution, transaction cost and risk restriction mechanism, centralized optimization method. The property right institution of electricity market is studied in this paper. Property right is the key ingredient to realize the checkout of economic decisions; it is also the premise to introduce market competition. Property right is more important in economic sense, what the electricity market needs is property reform, but not the reform of ownership and management right. The establishment of property right in electricity market can be classified in two parts, namely property right restructure and the transaction rule of property right. Both of them are introduced in this paper. Finally, the paper indicates that when the efficiency improvement of property right reform can't support the transaction costs that causes, the other resolution should be considered. This paper also analyses the relation between transaction costs and electricity market. It is illustrated that market competition can reduce more transaction cost than traditional economic system. During the market reform of electricity industry, it is necessary design the trade rule and regulatory mechanism carefully, so that market will have less information cost, bargain cost and implement cost. There are three kinds of influence which transaction costs have on the electricity market, they are market equilibrium, industry structure and institution choice. Risk is another important factor that will influence the efficiency of electricity, this paper studies risk and its countermeasures of electricity market. The risk of electricity is resulted from three factors, which are bounded rationality, opportunism and the uncertainties of future. This paper points out that the scale economy of information could be utilized to enhance the forecast ability of market participants. At the same time, complete contract, clear property right, sound law and rule could...