Download presentation
Presentation is loading. Please wait.
Published bySerenity Harber Modified over 10 years ago
1
Trade1 ECON 4925 Autumn 2007 Electricity Economics Lecture 6 Lecturer: Finn R. Førsund
2
Trade 2 Unconstrained trade Consider two countries (regions) linked by an interconnector, home country and abroad Loss on the interconnector is disregarded Trade during a period is the net flow, i.e., either import or export The price of electricity abroad is exogenous Money is a new good in our partial model Trade income (expenditure) is just added (subtracted from) to the social value of electricity consumption
3
Trade 3 Opening up for free trade The social planning problem New symbols
4
Trade 4 The Lagrangian Inserting the energy balance because it has to hold as an equality
5
Trade 5 The Kuhn – Tucker conditions The second equation holds with equality because trade variable is unrestricted in sign
6
Trade 6 Trade and the bathtub diagram for two periods γ1γ1 p1p1 Period 2Period 1 Total available water p2p2 Import A x1x1 A' B A AU B' CC' x2x2 D p 1 AU p 2 AU p 2 XI = 2 p 1 XI = 1
7
Trade 7 Trade and the bathtub diagram for two periods γ1γ1 p1p1 Period 2Period 1 Total available water p2p2 Import A x1x1 A' B A AU B' CC' x2x2 D p 1 AU p 2 AU p 2 XI = 2 p 1 XI = 1
8
Trade 8 The social planning problem with trade constraint
9
Trade 9 The Lagrangian function
10
Trade 10 The Kuhn – Tucker conditions
11
Trade 11 The bathtub diagram for two periods p1p1 Prod.1Cons.2 Import Export Total available water p2p2 α2α2 β1β1 γ1γ1 p AU Period 1 Period 2 x1x1 A BCD x2x2 p 1 = 1 p 1 XI p 2 XI p 2 = 2
12
Trade 12 Trade between countries Hydro and Thermal The social planning problem in Thermal Unlimited trade to exogenous prices
13
Trade 13 The Lagrangian function Inserting the energy balance
14
Trade 14 The Kuhn – Tucker conditions The second equation holds with equality because the trade variable is unrestricted in sign
15
Trade 15 Illustrating two periods Period 2Period 1 ExportImport c'c' c'c' θ2θ2 c' (0) x2x2 x1x1 x1x1 A B C OD p 1 AU p 1 XI =p 1 p 2 AU p 2 XI =p 2
16
Trade 16 Trade between Hydro and Thermal The cooperative social planning problem
17
Trade 17 The Lagrangian function Inserting the energy balances Export for one country is import for the other
18
Trade 18 The Kuhn – Tucker conditions
19
Trade 19 Combining the bathtub diagram and the thermal diagram for two periods θ2θ2 Period 1 Period 2 c'c' c'c' Import Export p 1 Th =p 1 H = p 2 Th =p 2 H = ImportExpor t Hydro Thermal A'A'A M'M' M B'B'B
20
Trade 20 p 1 Th =p 1 H = 1 Trade Hydro –Thermal with reservoir constraint Period 1 Period 2 c'c' c'c' Import θ2θ2 p 2 Th =p 2 H = 2 A B C D Import Export Hydro Thermal Export γ1γ1 A'A' D'D'
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.