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An Analysis of Colombian Power Market Price Behavior from an Industrial Organization Perspective

Ecos de Economía: A Latin American Journal of Applied Economics

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Title An Analysis of Colombian Power Market Price Behavior from an Industrial Organization Perspective
 
Creator Duarte Venslauskas, Ona; London School of Economics and Political Science
García Rendón, John J.; Universidad EAFIT
 
Subject Cournot model; spot price; energy market; residual demand index; Herfindahl - Hirschman index; VAR
L13; L19; L94
 
Description We analyze the behavior of spot prices in the Colombian wholesale power market, using a series of models derived from industrial organization theory.  We first create a Cournot-based model that simulates the strategic behavior of the market-leader power generators, which we use to estimate two industrial organization variables, the Index of Residual Demand and the Herfindahl-Hirschman Index (HHI).  We use these variables to create VAR models that estimate spot prices and power market impulse-response relationships.  The results from these models show that hydroelectric generators can use their water storage capability strategically to affect off-peak prices primarily, while the thermal generators can manage their capacity strategically to affect on-peak prices.  In addition, shocks to the Index of Residual Capacity and to the HHI cause spot price fluctuations, which can be interpreted as the generators´ strategic response to these shocks.
 
Publisher Universidad EAFIT
 
Contributor —
 
Date 2015-12-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
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Format application/pdf
 
Identifier http://publicaciones.eafit.edu.co/index.php/ecos-economia/article/view/3344
 
Source Ecos de Economía: A Latin American Journal of Applied Economics; Vol 19, No 41 (2015)
Ecos de Economía; Vol 19, No 41 (2015)
1657-4206
 
Language spa
 
Relation http://publicaciones.eafit.edu.co/index.php/ecos-economia/article/view/3344/pdf_6
 
Rights Copyright (c) 2015 Ona Duarte Venslauskas, John J. García Rendón