SG: Incentivizing Growth and Investment in DR

Electricity Pricing

Platforms

DR adoption -> generation capacity, other customers on a flat rate, efficiency

Borenstein and Holland (2005)

Transaction costs in RTP

Joskow and Tirole (2006)

Real Time Pricing vs Time of Use Pricing of Electricity

Borenstein and Holland (2005)

Joskow and Wolfram (2012)

Hogan (2014)

Our Paper

Cross-subsidization

Parker and Van Alstyne (2005)

Role of expectations in shaping equilibrium

Katz and Shapiro (1985)

Differentiation

Eisenmann (2007)

Each and Thompson (2006)

Nault and Dexter (2006)

Intermediated PMN with Transfers, Fees

Firms distributed by capability, Investments drive demand

Positive work , describing how EM sets fees and margins

Find that specialization is rewarded, EM will be most profitable when limiting firm participation, comparing endogenous pricing with exogenous

Contribution

Formerly Unstudied Aspects

Competition between firms

Multi-dimensional capability

Firms choose separate prices for each product

SG Investment Grant Program

Why is this contribution important: Closer map to the reality of SG

Competition between Firms

2-Dim Capability

Prices are set independently by firms

Platform collects a fee from each side of the market

Changes the firm level equilibrium

An institution to coordinate SG investments does not exist, we assess its value

Vijairaghavan 2019

Interaction between firm prices and f, m, investments.

Vijairaghavan 2019

Mechanism Design to generate surplus through DR adoption

Study how multi-product firms operating on a platform set prices and investment in a competitive environment

Theoretically articulate a new policymaker consideration