Record Details

Vertical Integration and Capacity Competition in Electricity Markets

Organizational Economics Proceedings

View Archive Info
 
 
Field Value
 
Title Vertical Integration and Capacity Competition in Electricity Markets
 
Creator Walshaw, Rowan
Meagher, Kieron
 
Description This paper characterises the impact of vertical integration on price equilibria and incentives to strategically withhold capacity in a wholesale electricity auction.  A two-stage game is analysed where vertically integrated firms first declare the quantity of electricity available and then compete in a uniform price auction. Consistent with empirical literature on electricity markets, the model finds that firms’ incentives are determined by their net demand position in the market.   Results indicate that for the majority of parameter values, a vertically integrated structure yields a greater occurrence of competitive pricing in the wholesale market. Contrary to recent analysis of non-integration, vertical integration eliminates incentives for strategic capacity withholding.
 
Publisher The University of Sydney
 
Contributor —
 
Date 2014-03-24
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Format application/pdf
 
Identifier https://openjournals.library.sydney.edu.au/index.php/OEW/article/view/7541
 
Source Organizational Economics Proceedings; Vol 2, No 1 (2013): 7th Annual Organizational Economics Workshop July 2013
2201-8468
 
Language eng
 
Relation https://openjournals.library.sydney.edu.au/index.php/OEW/article/view/7541/7857