Abstract
Abstract We develop a stylized two-sector analytical general equilibrium model that elucidates mechanisms of adjustment to widespread, long-duration electric power disruptions. Algebraic solutions illustrate the relative importance of resilience through producer and consumer input substitutability and mitigation investment in backup infrastructure capacity in moderating the economy-wide costs of outages. Simulations of the impacts of a two-week power outage on California's Bay Area economy using both the analytical model and a computational general equilibrium model yield welfare losses that are substantially smaller than stated-preference estimates of willingness to pay. Results highlight the role of resilience in moderating consequences of energy supply shocks.
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