Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1015: Strategic Withholding through Production Failures

Sara Fogelberg () and Ewa Lazarczyk ()
Additional contact information
Sara Fogelberg: Research Institute of Industrial Economics (IFN), Postal: and Stockholm University
Ewa Lazarczyk: Research Institute of Industrial Economics (IFN), Postal: and Stockholm School of Economics

Abstract: Anecdotal evidence indicates that electricity producers use production failures to disguise strategic reductions of capacity in order to influence prices, but systematic evidence is lacking. We use a quasi-experimental set up and data from the Swedish energy market to examine such behavior. In a market without strategic withholding, the decision of reporting a failure should be independent of the market price. We show that marginal producers in fact base their decision to report a failure in part on prices, which indicates that failures are a result of economic incentives as well as of technical problems.

Keywords: Electricity markets; Urgent Market Messages (UMMs); Unplanned failures

JEL-codes: L49; L94

31 pages, March 31, 2014

Full text files

wp1015.pdf PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2018-01-23 23:34:45.