S-WoPEc
 
Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
Department of Economics, University of Oslo Memorandum

No 07/2004:
Properties of a non-competitive electricity market dominated by hydroelectric power

Finn R. Førsund () and Michael Hoel ()

Abstract: An important conclusion from the literature on hydropower is that if there are no other constraints than the available water reservoirs for a year, and operating costs are ignored, the competitive (and socially optimal) outcome is characterized by the (present value) price being constant through the year. A second important conclusion is that the outcome under monopoly generally will differ from this, provided that the demand functions differ across different days (or other sub-periods) of the year.We show that even if the demand function is the same all days of the year, the monopoly outcome will generally differ from the competitive outcome. The difference is caused by the profit function of a price-setting producer of hydropower being non-concave. This non-concavity can be caused by short-run capacity limits either on exports and imports of electricity, or on the supply of alternative electricity sources.

Keywords: Electricity prices; Hydropower; (follow links to similar papers)

JEL-Codes: L12; L13; L94; Q25; (follow links to similar papers)

24 pages, April 29, 2004

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

Memo-07-2004.pdf    PDF-file
Download Statistics

Questions (including download problems) about the papers in this series should be directed to Magnus Gabriel Aase ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:osloec:2004_007 This page was generated on 2016-01-06 15:32:27