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