Sharing Is Not Caring: Backward Integration of Consumers

50 Pages Posted: 16 Feb 2018

See all articles by Christian Spindler

Christian Spindler

University of Vienna, Faculty of Business, Economics, and Statistics, Institute of Business Administration, Department of Economics, Students

Oliver Woll

ZEW – Leibniz Centre for European Economic Research - Competition and Regulation Research Group

Dominik Schober

ZEW – Leibniz Centre for European Economic Research

Date Written: 2018

Abstract

A new type of player occurs in the sharing economy: a vertically integrated consumer who owns production facilities and has direct market access, often termed “active prosumer”. The prosumer faces a trade-off between market transaction cost and substantial strategic potential to influence both market demand and supply by her decisions. We discuss optimal marketing and production decisions in light of this trade-off. An empirical application to the German-Austrian electricity market demonstrates substantial incentives for active market participation by recently added decentralized renewables production. Prosumers can achieve considerable profit increases by switching roles of net market supplier or customer.

Keywords: Active Prosumer, Capacity Withholding, Self-Supply, Vertical Integration, Consumer Production, Market Participation Cost

Suggested Citation

Spindler, Christian and Woll, Oliver and Schober, Dominik, Sharing Is Not Caring: Backward Integration of Consumers (2018). ZEW - Centre for European Economic Research Discussion Paper No. 18-006. Available at SSRN: https://ssrn.com/abstract=3124190 or http://dx.doi.org/10.2139/ssrn.3124190

Christian Spindler (Contact Author)

University of Vienna, Faculty of Business, Economics, and Statistics, Institute of Business Administration, Department of Economics, Students ( email )

Bruennerstrasse 72
Vienna
Austria

Oliver Woll

ZEW – Leibniz Centre for European Economic Research - Competition and Regulation Research Group ( email )

L7,1
Mannheim, 68161
Germany

Dominik Schober

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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