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MK1: Any demand response is like a materializing factor post supply. So it behaves as a generation in the mechanism behind the equilibrium dynamics. But at the same time equilibrium cannot be introduced without the generator as well and that part of the game is provided by demand because it is through this interaction of demand and supply that we reach a situation of equilibrium.
MK2: In a situation of crisis any form of revenue acts as a source of respite for the firms. So it is no surprise that DR might be an economic respite from shortage in contingency reserves due to excess load.
MK3: Clearly the firm likes to reduce load with an increase in prices so it perceives a decline it demand due to an increase in prices. Clearly this is a situation where the demand curve is downwards sloping and the supply curve is elastic. If activated this will keep on reducing prices to the extent that the market eventually fails....
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