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Electricity Industrial Organization: What About The Strategic Behavior Of Hydro And Thermal Operators?

Author

Listed:
  • Houeida Hedfi

    (LEGI-Polytechnic School of Tunisia, University of Carthage, Tunisia.)

  • Ahlem Dakhlaoui

    (LEGI-Polytechnic School of Tunisia, University of Carthage, Tunisia.)

Abstract

In this paper, we develop a two-period model where we analyze and compare a hydro/thermal electrical system under different industrial organization: monopoly, Cournot competition and collusion; under storage constraint, water availability constraint and thermal turbine capacity constraint. First, we prove that the technological complementarity has an important role in satisfying electricity demand in the different industrial organizations. Second, we show by the analytical resolution, that intertemporal private monopoly water transfer from off-peak season to peak season is not as high as the same transfer under a public monopoly and therefore this increases the market price. Under Cournot competition, an increase in the peak season demand implies a water transfer strategy from off-peak to peak season. The results of collusion show that the electricity price is less dependent on the hydropower capacity.

Suggested Citation

  • Houeida Hedfi & Ahlem Dakhlaoui, 2020. "Electricity Industrial Organization: What About The Strategic Behavior Of Hydro And Thermal Operators?," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 438-442.
    • Handle: RePEc:eco:journ2:2020-02-50
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    References listed on IDEAS

    as
    1. Stefan Ambec & Joseph A. Doucet, 2003. "Decentralizing hydro power production," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(3), pages 587-607, August.
    2. Talat S. Genc & Henry Thille, 2011. "Dynamic Competition in Electricity Markets: Hydroelectric and Thermal Generation," Working Papers 1104, University of Guelph, Department of Economics and Finance.
    3. Crampes, Claude & Moreaux, Michel, 2010. "Pumped storage and cost saving," Energy Economics, Elsevier, vol. 32(2), pages 325-333, March.
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    More about this item

    Keywords

    Electricity market; Monopoly; Competition; Collusion; Hydro; Thermal.;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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