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OLIGOPOLY PRICING (3) answer(s).
 
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1
ID:   104944


Novel approach for modeling deregulated electricity markets / Rubin, Ofir D; Babcock, Bruce A   Journal Article
Babcock, Bruce A Journal Article
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Publication 2011.
Summary/Abstract The theoretical framework developed in this study allows development of a model of deregulated electricity markets that explains two familiar empirical findings; the existence of forward premiums and price-cost markups in the spot market. This is a significant contribution because electricity forward premiums have been previously explained exclusively by the assumptions of perfect competition and risk-averse behavior while spot markups are generally the outcome of a body of literature assuming oligopolistic competition. Our theoretical framework indicates that a certain premium for forward contracting is required for efficient allocation of generation capacity. However, due to the uniqueness of electricity and the design of deregulated electricity markets this premium might be substantially higher than its optimal level.
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2
ID:   096620


Wind power and market power in competitive markets / Twomey, Paul; Neuhoff, Karsten   Journal Article
Twomey, Paul Journal Article
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Publication 2010.
Summary/Abstract Average market prices for intermittent generation technologies are lower than for conventional generation. This has a technical reason but can be exaggerated in the presence of market power. When there is much wind smaller amounts of conventional generation technologies are required, and prices are lower, while at times of little wind prices are higher. This effect reflects the value of different generation technologies to the system. But under conditions of market power, conventional generators with market power can further depress the prices if they have to buy back energy at times of large wind output and can increase prices if they have to sell additional power at times of little wind output. This greatly exaggerates the effect. Forward contracting does not reduce the effect. An important consequence is that allowing market power profit margins as a support mechanism for generation capacity investment is not a technologically neutral policy.
Key Words Wind Power  ;  Oligopoly Pricing  ;  Intermittency 
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3
ID:   097462


Wind power and market power in competitive markets / Twomey, Paul; Neuhoff, Karsten   Journal Article
Twomey, Paul Journal Article
0 Rating(s) & 0 Review(s)
Publication 2010.
Summary/Abstract Average market prices for intermittent generation technologies are lower than for conventional generation. This has a technical reason but can be exaggerated in the presence of market power. When there is much wind smaller amounts of conventional generation technologies are required, and prices are lower, while at times of little wind prices are higher. This effect reflects the value of different generation technologies to the system. But under conditions of market power, conventional generators with market power can further depress the prices if they have to buy back energy at times of large wind output and can increase prices if they have to sell additional power at times of little wind output. This greatly exaggerates the effect. Forward contracting does not reduce the effect. An important consequence is that allowing market power profit margins as a support mechanism for generation capacity investment is not a technologically neutral policy.
Key Words Wind Power  ;  Oligopoly Pricing  ;  Intermittency 
        Export Export