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An experimental analysis of the effects of automated mitigation procedures on investment and prices in wholesale electricity markets

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Author Info
Lynne Kiesling ()
Bart Wilson ()

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Abstract

In this paper we report the findings of an economic experiment that examines the effects of an automated mitigation procedure (AMP) on prices and capacity investment choices of suppliers in a wholesale electricity market. Specifically, we examine the effects of different market power incentives on markets with and without an AMP. While we find that the AMP does not affect overall investment in capacity, the most significant determinant of long-run prices is investment in new capacity. The AMP also does not reduce long-run prices relative to markets without an AMP. Furthermore, our participants successfully manipulated the AMP’s trigger price. Copyright Springer Science+Business Media, LLC 2007

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File URL: http://hdl.handle.net/10.1007/s11149-006-9018-4
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Publisher Info
Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 31 (2007)
Issue (Month): 3 (June)
Pages: 313-334
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:regeco:v:31:y:2007:i:3:p:313-334

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Web page: http://www.springerlink.com/link.asp?id=100298

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Related research
Keywords: Electric power markets; Automated mitigation procedures; investment; Price caps; C92; L11; L94;

References listed on IDEAS
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.:

  1. Catherine D. Wolfram, 1999. "Measuring Duopoly Power in the British Electricity Spot Market," American Economic Review, American Economic Association, vol. 89(4), pages 805-826, September. [Downloadable!] (restricted)
  2. Holt, Charles A, 1989. "The Exercise of Market Power in Laboratory Experiments," Journal of Law & Economics, University of Chicago Press, vol. 32(2), pages S107-30, October.
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  3. Kahn, Alfred E., 2002. "The Adequacy of Prospective Returns on Generation Investments under Price Control Mechanisms," The Electricity Journal, Elsevier, vol. 15(2), pages 37-46, March. [Downloadable!] (restricted)
  4. Borenstein, Severin, 2000. "Understanding Competitive Pricing and Market Power in Wholesale Electricity Markets," The Electricity Journal, Elsevier, vol. 13(6), pages 49-57, July. [Downloadable!] (restricted)
    Other versions:
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Cited by:
(explanations, 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.)

  1. Rimvydas Baltaduonis, 2007. "Simple-Offer vs. Complex-Offer Auctions in Deregulated Electricity Markets," Working papers 2007-14, University of Connecticut, Department of Economics. [Downloadable!]
  2. Rimvydas Baltaduonis, 2007. "An Experimental Study of Complex-Offer Auctions: Payment Cost Minimization vs. Offer Cost Minimization," Working papers 2007-13, University of Connecticut, Department of Economics. [Downloadable!]
  3. Christian Vossler & Timothy Mount & Robert Thomas & Ray Zimmerman, 2009. "An experimental investigation of soft price caps in uniform price auction markets for wholesale electricity," Journal of Regulatory Economics, Springer, vol. 36(1), pages 44-59, August. [Downloadable!] (restricted)
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