3P; + 300 lectricity market so that there are a number of power plant he electricity market will now be controlled by a regulator se table below: Electricity Distribution Asking price / KWh quantity/KWh

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter1: Multinational Financial Management: An Overview
Section: Chapter Questions
Problem 19QA
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Assume Country X has an electricity market with supply and demand being given below:
Qp = -Pp + 200
Qs = -3Ps + 300
Part C- horizontally-integrated market
If the government decides to reform the electricity market so that there are a number of power plant
firms as well as a number of electricity distribution firms. The electricity market will now be controlled by a regulator
using an auction system. A sample of the bids is given by the table below:
Electricity Producers
Electricity Distribution
Asking price / KWh quantity/KWh Asking price / KWh quantity/KWh
0.74
25
0.56
30
0.32
20
0.34
60
0.46
35
2$
0.55
25
0.53
25
0.64
25
0.64
30
2$
0.43
40
By studying the bids,
1· Find the range of the equilibrium market price
2. Find the equilibrium market quantity
3. Find the total welfare
Transcribed Image Text:Assume Country X has an electricity market with supply and demand being given below: Qp = -Pp + 200 Qs = -3Ps + 300 Part C- horizontally-integrated market If the government decides to reform the electricity market so that there are a number of power plant firms as well as a number of electricity distribution firms. The electricity market will now be controlled by a regulator using an auction system. A sample of the bids is given by the table below: Electricity Producers Electricity Distribution Asking price / KWh quantity/KWh Asking price / KWh quantity/KWh 0.74 25 0.56 30 0.32 20 0.34 60 0.46 35 2$ 0.55 25 0.53 25 0.64 25 0.64 30 2$ 0.43 40 By studying the bids, 1· Find the range of the equilibrium market price 2. Find the equilibrium market quantity 3. Find the total welfare
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