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A new loss allocation (LA) scheme based on the principle of equivalent bilateral exchanges (EBEs) is presented and compared with other available techniques. Formulation and results from extensive simulations including consistency tests show that the suggested methodology has several desirable properties: It is flow-based, requiring only a solved load flow for its implementation; it is not dependent on the choice of a slack bus; it is straightforward to apply; undesirable negative loss allocation is not produced; and low volatilities are shaped. An economic analysis with various LA methods is also carried out when these are integrated into a combined economic dispatch/load flow dispatch strategy, a likely scenario for LA in a real system. This combined dispatch strategy yields prices charged to the loads and rates received by the generators that account for loss allocation and loss supply. Results show that these economic indexes are very close to the marginal costs derived from an optimal power flow (OPF) approach with the advantage of reducing volatility.