Im-Perfectly Competitive Contract Markets for Electricity
44 Pages Posted: 4 Feb 2008 Last revised: 18 Apr 2008
Date Written: Jannuary 2008
Abstract
Notwithstanding academic and regulatory interests as well as empirical evidence, to date the effect of contracts on competition in electricity markets is a very controversial issue. We suggest an original approach to shed light on this debate. Modeling competition by mean of conjectural variations we demonstrate that anti-competitive effects follow the upsurge of discrimination practices. Altering the time distribution of the perfect arbitrage constraint (i.e. ex-post in spite of ex-ante) we put a bridge between IO and financial models on price manipulation. Endogenizing forward demand we provide a rationale for shifting dominant attitudes to forward markets. Finally, studying sequential choices we balance quantity and price competition with Stackelberg leadership. Simulations and qualitative estimates support our findings.
Keywords: Electricity Markets, Imperfect Competition, Forward and Futures
JEL Classification: L13, L44, L94
Suggested Citation: Suggested Citation
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