3/30/2006

Electricity Price Gouging

I recently read an interesting article entitled Electricity Price Gouging in California? This article talked about how many people were angry with the high prices of electricity in California. Everyone was trying to blame the Government or energy generators, but this article points out that this could just be a normal functioning market. This article also made the point that markets are not perfectly competitive at all times. Energy generators have found a way to exploit a situation of imperfect competion. Everyone was hopping that the deregulation of this market would fix everything, but it many ways it has made it worse. This may only be true in the short run. As more time passes, the high prices will drive more suppliers into the market.

2 comments:

Dr. Tufte said...

-1 on Ashton's post for a spelling error.

Again, I don't remember there ever being a case of "price ungouging". This asymmetry makes me think that people are just being selfish here.

As to deregulation, the California deregulation of the late 90s is widely perceived to have been very badly designed and executed.

Joe said...

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