Competition for Flexible Distribution Resources in a 'Smart' Electricity Distribution Network

In a 'smart' electricity distribution network, flexible distribution resources (FDRs) can be aggregated to improve efficiency in the power market. But aggregation enables whoever controls resources to exercise market power. This paper establishes a ranking of market structures: Independent aggregators competing for FDRs are more efficient than an integrated distribution system operator (DSO)/aggregator, which is more efficient than an integrated generator/aggregator, which is more efficient than no FDR market. A no-market solution is more efficient than an FDR market with independent aggregators and an integrated DSO/aggregator. The paper also characterizes a regulation that implements the efficient outcome