OR, you could collude and not bring power online to reap massive amounts of money in short term predatory bursts, since people can't switch providers quickly when there's no power, internet, etc.
Basically that is some of what caused the California blackouts back in the Enron days. The elasticity of the market with respect to consumers choosing a different provider is pretty inelastic, in the best case it's one month. Meanwhile, Enron was doing hourly manipulations of power plant shutdowns.
What you're posting here, even though it's a garden variety laissez faire microeconomic argument, actually advocates for the opposite: regulation to eliminate spike pricing.
In this case, regulation would have made a more robust system, with better ability to pull from surrounding grids, and avoided the shock pricing.
Can you imagine you show up at a hospital during, say, a large scale pandemic that has reduced the capacity of the hospital, and told that your necessary emergency surgery was going to cost 100x more than normal in order to "incent" more surgeons to work?
And do you think people should be actively switching power providers on a daily basis? Should everyone have a TV "dashboard" indicating energy market conditions? And should they quit their day jobs to do that?
Pure market microeconomics is a fantasy, human computation for market prices is far too limited, information is far too limited. When its pushed to the extremes, chances are what is happening is the Enron-type market manipulators are creating opportunities for them to extract money from created chaos.
Basically that is some of what caused the California blackouts back in the Enron days. The elasticity of the market with respect to consumers choosing a different provider is pretty inelastic, in the best case it's one month. Meanwhile, Enron was doing hourly manipulations of power plant shutdowns.
What you're posting here, even though it's a garden variety laissez faire microeconomic argument, actually advocates for the opposite: regulation to eliminate spike pricing.
In this case, regulation would have made a more robust system, with better ability to pull from surrounding grids, and avoided the shock pricing.
Can you imagine you show up at a hospital during, say, a large scale pandemic that has reduced the capacity of the hospital, and told that your necessary emergency surgery was going to cost 100x more than normal in order to "incent" more surgeons to work?
And do you think people should be actively switching power providers on a daily basis? Should everyone have a TV "dashboard" indicating energy market conditions? And should they quit their day jobs to do that?
Pure market microeconomics is a fantasy, human computation for market prices is far too limited, information is far too limited. When its pushed to the extremes, chances are what is happening is the Enron-type market manipulators are creating opportunities for them to extract money from created chaos.