SSE/EFI Working Paper Series in Economics and Finance
No 496:
Strategic use of available capacity in the electricity spot market
Chloé Le Coq ()
Abstract: The literature on deregulated electricity markets
generally assumes available capacities to be given. In contrast, this paper
studies a model where firms precommit to capacity levels before competing
in a uniform price auction. The analysis sheds light on recent empirical
findings that firms use their available capacity to obtain high market
prices. There exist two equilibria where at least one firm withholds its
available capacity to induce the maximum price. Moreover, in one
equilibrium, the inefficient firm obtains a relatively large market
share.
Keywords: spot market; capacity game; auction mechanism; electricity.; (follow links to similar papers)
JEL-Codes: C72; D43; D44; L13; L94; (follow links to similar papers)
27 pages, April 18, 2002
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