Competition, Contracts and Entry in the Electricity Spot Market
AbstractThe supply function model of the English electricity spot market is extended to include equilibrium in a contract market in the presence of entry threats, both of which have dramatic effects on the determination of equilibrium. The paper presents an analytically tractable model which can be solved with contracts, variable numbers of competitors, and capacity constraints. In a well-defined case, capacity binds and entrants have a comparative advantage in nvestment, otherwise their entry threat constrains prices, but consumers would prefer more incumbents.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 9707.
Date of creation: Jan 1997
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Web page: http://www.econ.cam.ac.uk/index.htm
Other versions of this item:
- David M. Newbery, 1998. "Competition, Contracts, and Entry in the Electricity Spot Market," RAND Journal of Economics, The RAND Corporation, vol. 29(4), pages 726-749, Winter.
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