Vertically integrated firms' investments in electricity generating capacities
AbstractWe compare investments in generating capacities of an integrated monopolist with the aggregate investments of two vertically integrated competing firms. The firms invest in their capacity and fix the retail price while electricity demand is uncertain. The wholesale price is determined in a unit price auction where the firms know the level of demand when they bid their capacities. Total capacities can be larger or smaller with a duopoly than with a monopoly. If the two firms select the Pareto dominant equilibrium, then the retail price is always higher and the social welfare lower in the duopoly case.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 27 (2009)
Issue (Month): 4 (July)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505551
Capacity investments Vertical Integration Unit price auction Demand uncertainty Subgame perfect equilibria;
Other versions of this item:
- Anette Boom, 2007. "Vertically Integrated Firms' Investments in Electricity Generating Capacities," CIE Discussion Papers 2007-14, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
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.:
- Castro-Rodriguez, Fidel & Marín, Pedro L. & Siotis, Georges, 2009.
"Capacity choices in liberalised electricity markets,"
Elsevier, vol. 37(7), pages 2574-2581, July.
- Castro-Rodriguez, Fidel & Marín Uribe, Pedro Luis & Siotis, Georges, 2001. "Capacity Choices in Liberalized Electricity Markets," CEPR Discussion Papers 2998, C.E.P.R. Discussion Papers.
- Von der Fehr, N.H.M. & Harbord, D., 1992.
"Spot Market Competition in the UK Electricity Industry,"
09/1992, Oslo University, Department of Economics.
- von der Fehr, Nils-Henrik Morch & Harbord, David, 1993. "Spot Market Competition in the UK Electricity Industry," Economic Journal, Royal Economic Society, vol. 103(418), pages 531-46, May.
- Léautier, Thomas-Olivier, 2011.
"The Visible Hand: Ensuring Optimal Investment in Electric Power Generation,"
IDEI Working Papers
605, Institut d'Économie Industrielle (IDEI), Toulouse, revised Mar 2013.
- Léautier, Thomas-Olivier, 2011. "The Visible Hand: Ensuring Optimal Investment in Electric Power Generation," TSE Working Papers 10-153, Toulouse School of Economics (TSE), revised 19 Aug 2012.
- Ruderer, D., 2012. "The Impact of Transmission Pricing in Network Industries," Cambridge Working Papers in Economics 1230, Faculty of Economics, University of Cambridge.
- Sakellaris, Kostis, 2010. "Modeling Electricity Markets as Two-Stage Capacity Constrained Price Competition Games under Uncertainty," MPRA Paper 23317, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.