Advanced Search
MyIDEAS: Login to save this paper or follow this series

Competition with Forward Contracts: A Laboratory Analysis Motivated by Electricity Market Design

Contents:

Author Info

  • Jordi Brandts
  • Paul Pezanis-Christou
  • Arthur Schram

Abstract

We use experiments to study the efficiency effects for a market as a whole of adding the possibility of forward contracting to a pre-existing spot market. We deal separately with the cases where spot market competition is in quantities and where it is in supply functions. In both cases we compare the effect of adding a contract market with the introduction of an additional competitor, changing the market structure from a triopoly to a quadropoly. We find that, as theory suggests, for both types of competition the introduction of a forward market significantly lowers prices. The combination of supply function competition with a forward market leads to high efficiency levels.

(This abstract was borrowed from another version of this item.)

Download Info

If 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.
File URL: http://pareto.uab.es/wp/2003/58103.pdf
Download Restriction: no

Bibliographic Info

Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 666156000000000172.

as in new window
Length:
Date of creation: 21 Aug 2003
Date of revision:
Handle: RePEc:cla:levrem:666156000000000172

Contact details of provider:
Web page: http://www.dklevine.com/

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Abbink, Klaus & Brandts, Jordi & McDaniel, Tanga, 2003. "Asymmetric Demand Information in Uniform and Discriminatory Call Auctions: An Experimental Analysis Motivated by Electricity Markets," Journal of Regulatory Economics, Springer, Springer, vol. 23(2), pages 125-44, March.
  2. Green, Richard J & Newbery, David M, 1992. "Competition in the British Electricity Spot Market," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(5), pages 929-53, October.
  3. Hoffman, Elizabeth & Plott, Charles R., . "The Effect of Intertemporal Speculation on the Outcomes in Seller Posted Offer Auction Markets," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 241, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Steffen Huck & Hans-Theo Normann & Joerg Oechssler, 1997. "Learning in Cournot Oligopoly - An Experiment," Game Theory and Information, EconWPA 9707009, EconWPA, revised 22 Jul 1997.
  5. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, Econometric Society, vol. 57(6), pages 1243-77, November.
  6. Rassenti, Stephen & Reynolds, Stanley S. & Smith, Vernon L. & Szidarovszky, Ferenc, 2000. "Adaptation and convergence of behavior in repeated experimental Cournot games," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 41(2), pages 117-146, February.
  7. Newbery, David M., 2002. "Problems of liberalising the electricity industry," European Economic Review, Elsevier, Elsevier, vol. 46(4-5), pages 919-927, May.
  8. Allaz Blaise & Vila Jean-Luc, 1993. "Cournot Competition, Forward Markets and Efficiency," Journal of Economic Theory, Elsevier, Elsevier, vol. 59(1), pages 1-16, February.
  9. Le Coq, Chloe & Orzen, Henrik, 2006. "Do forward markets enhance competition?: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 61(3), pages 415-431, November.
  10. Miller, R. M. & Plott, Charles R. & Smith, Vernon L., . "Intertemporal Competitive Equilibrium: An Empirical Study of Speculation," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 87, California Institute of Technology, Division of the Humanities and Social Sciences.
  11. Rassenti, Stephen J & Smith, Vernon L & Wilson, Bart J, 2003. "Discriminatory Price Auctions in Electricity Markets: Low Volatility at the Expense of High Price Levels," Journal of Regulatory Economics, Springer, Springer, vol. 23(2), pages 109-23, March.
  12. Bolle, Friedel, 2001. "Competition with supply and demand functions," Energy Economics, Elsevier, Elsevier, vol. 23(3), pages 253-277, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cla:levrem:666156000000000172. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David K. Levine).

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.