Implicit collusion and individual market power in electricity markets
AbstractWholesale electricity markets may not produce competitive outcomes, either as a result of the exercise of market power, or through problems of implicit collusion. In comparison with the great amount of attention paid to issues of market power, the problems of implicit collusion have not been extensively studied. In this paper, we use a coevolutionary approach to explore the effect of the price elasticity of demand, capacity and forward contracts on implicit collusion in a duopoly. We will demonstrate that implicit collusion has the most importance in market conditions under which there is an intermediate amount of market power. Thus markets which are either highly competitive or in which one or both of the two generators can exercise considerable market power, are also markets in which implicitly collusive outcomes are less likely to arise.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Operational Research.
Volume (Year): 211 (2011)
Issue (Month): 2 (June)
Contact details of provider:
Web page: http://www.elsevier.com/locate/eor
Tacit collusion Market power Electricity Coevolution;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Osborne, Martin J & Pitchik, Carolyn, 1987. "Cartels, Profits and Excess Capacity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(2), pages 413-28, June.
- Brock, William A & Scheinkman, Jose A, 1985. "Price Setting Supergames with Capacity Constraints," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 371-82, July.
- Kai-Uwe Kühn, 2005. "Collusion Theory in Search of Robust Themes: A Comment on Switgard Feuerstein's Survey," Journal of Industry, Competition and Trade, Springer, vol. 5(3), pages 207-215, December.
- Rafael Macatangay, 2002. "Tacit Collusion in the Frequently Repeated Multi-Unit Uniform Price Auction for Wholesale Electricity in England and Wales," European Journal of Law and Economics, Springer, vol. 13(3), pages 257-273, May.
- Davidson, Carl & Deneckere, Raymond J, 1990.
"Excess Capacity and Collusion,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(3), pages 521-41, August.
- Natalia Fabra & Juan Toro, 2001.
"Price Wars and Collusion in the Spanish Electricity Market,"
Economic Working Papers at Centro de Estudios Andaluces
E2001/05, Centro de Estudios Andaluces.
- Fabra, Natalia & Toro, Juan, 2005. "Price wars and collusion in the Spanish electricity market," International Journal of Industrial Organization, Elsevier, vol. 23(3-4), pages 155-181, April.
- Natalia Fabra & Juan Toro, 2002. "Price Wars and Collusion in the Spanish Electricity Market," Industrial Organization 0212001, EconWPA, revised 31 Aug 2003.
- Juan Toro & Natalia Fabra, 2002. "Price Wars and Collusion in the Spanish Electricity Market," Economics Series Working Papers 136, University of Oxford, Department of Economics.
- Matti Liski & Juan-Pablo Montero, 2005.
"Forward trading and collusion in oligopoly,"
0506, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Dechenaux, Emmanuel & Kovenock, Dan, 2007.
"Tacit collusion and capacity withholding in repeated uniform price auctions,"
36764, University Library of Munich, Germany.
- Emmanuel Dechenaux & Dan Kovenock, 2007. "Tacit collusion and capacity withholding in repeated uniform price auctions," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1044-1069, December.
- Dechenaux, Emmanuel & Kovenock, Dan, 2005. "Tacit Collusion and Capacity Withholding in Repeated Uniform Price Auctions," Purdue University Economics Working Papers 1174, Purdue University, Department of Economics.
- Dechenaux, Emmanuel & Kovenock, Dan, 2005. "Tacit Collusion and Capacity Withholding in Repeated Uniform Price Auctions," Working Paper Series 636, Research Institute of Industrial Economics.
- Emmanuel Dechenaux & Dan Kovenock, 2005. "Tacit Collusion and Capacity Withholding in Repeated Uniform Price Auctions," UFAE and IAE Working Papers 645.05, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Frank Wolak, 2000. "An Empirical Analysis of the Impact of Hedge Contracts on Bidding Behavior in a Competitive Electricity Market," International Economic Journal, Taylor & Francis Journals, vol. 14(2), pages 1-39.
- Compte, Olivier & Jenny, Frederic & Rey, Patrick, 2002. "Capacity constraints, mergers and collusion," European Economic Review, Elsevier, vol. 46(1), pages 1-29, January.
- von der Fehr, Nils-Henrik Morch & Harbord, David, 1993.
"Spot Market Competition in the UK Electricity Industry,"
Royal Economic Society, vol. 103(418), pages 531-46, May.
- Von der Fehr, N.H.M. & Harbord, D., 1992. "Spot Market Competition in the UK Electricity Industry," Memorandum 09/1992, Oslo University, Department of Economics.
- Allaz Blaise & Vila Jean-Luc, 1993. "Cournot Competition, Forward Markets and Efficiency," Journal of Economic Theory, Elsevier, vol. 59(1), pages 1-16, February.
- Benoit, Jean-Pierre & Krishna, Vijay, 1987. "Dynamic Duopoly: Prices and Quantities," Review of Economic Studies, Wiley Blackwell, vol. 54(1), pages 23-35, January.
- Natalia Fabra, 2003. "Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 271-293, 09.
- Kimbrough, Steven O. & Murphy, Frederic H., 2013. "Strategic bidding of offer curves: An agent-based approach to exploring supply curve equilibria," European Journal of Operational Research, Elsevier, vol. 229(1), pages 165-178.
- Esmaili, Masoud & Shayanfar, Heidar Ali & Moslemi, Ramin, 2014. "Locating series FACTS devices for multi-objective congestion management improving voltage and transient stability," European Journal of Operational Research, Elsevier, vol. 236(2), pages 763-773.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.