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Economics

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The authors present a new formal framework for finding the long-run competitive market equilibrium through short-run equilibria by exploiting the operating policies and plant valuations. This “short-run approach” develops ideas of Boiteux and Koopmans. Applied to the peak-load pricing of electricity generated by thermal, hydro and pumped-storage plants, it gives a sound and practical method of valuing the fixed assets—in this case, the river flows and the geological sites suitable for reservoirs. Its main mathematical basis is the producer’s short-run profit maximization programme and its dual; their solutions have relatively simple forms that can greatly ease the fixed-point problem of solving for the general equilibrium. Since the optimal values (profit and cost functions) are usually nondifferentiable—this is so when there are joint costs of production such as capacity constraints—nonsmooth calculus is employed to resolve long-standing discrepancies between textbook theory and industrial reality by giving subdifferential extensions of basic results of microeconomics, including the Wong-Viner Envelope Theorem.

Energy policy. --- Energy and state. --- Energy storage. --- Mathematical optimization. --- Energy industries. --- Economic theory. --- Microeconomics. --- Economics. --- Economic Theory/Quantitative Economics/Mathematical Methods. --- Energy Policy, Economics and Management. --- Continuous Optimization. --- Energy Storage. --- Energy Economics. --- Equilibrium (Economics) --- Pricing. --- Price policy --- Price policy, Industrial --- Retail pricing --- Marketing --- DGE (Economics) --- Disequilibrium (Economics) --- DSGE (Economics) --- Dynamic stochastic general equilibrium (Economics) --- Economic equilibrium --- General equilibrium (Economics) --- Partial equilibrium (Economics) --- SDGE (Economic theory) --- Economics --- Statics and dynamics (Social sciences) --- Price theory --- Economic theory --- Political economy --- Social sciences --- Economic man --- Storage of energy --- Force and energy --- Power (Mechanics) --- Flywheels --- Pulsed power systems --- Optimization (Mathematics) --- Optimization techniques --- Optimization theory --- Systems optimization --- Mathematical analysis --- Maxima and minima --- Operations research --- Simulation methods --- System analysis --- Energy and state --- Power resources --- State and energy --- Industrial policy --- Energy conservation --- Government policy