The Extent of the Market and Integration Through Factor Markets: Evidence From Wholesale Electricity

Abstract

We document the influence of factor markets in determining the extent of the market, appealing to the Mundell hypothesis that trade in goods and factor markets are substitutes. We confirm this influence using the U.S. wholesale market for electric power. Although the Eastern, Western, and Texas regions cannot trade electricity, inputs such as natural gas move freely across these regions. Through a set of price transmission ratios, and a supply model for natural gas, we find regional electricity shocks do propagate across regions. We conclude output markets institutionally in autarky achieve modest degrees of economic integration through factor markets. (JEL C32, L94, Q41)

Research on a Prediction Model and Influencing Factors of Cross-Regional Price Differences of Rebar Spot Based on Long Short-Term Memory Network

“…The so-called cross-regional arbitrage is simply a process of selling something bought in the north to the south or something sold in the east to the west to profit from the price difference of the same product in different regions [6]. The cross-regional price difference is an important index reflecting the balance of supply and demand and the macro policy of the two regions [7]. When the price determined by the supply and demand of a region becomes higher, cross-regional trade will be initiated, and transport from the region with a low price to the region with a high price will supplement the supply quantity of the region with a high price, so that the regional supply and demand will reach the equilibrium point again, and vice versa.…”