Strategic Behaviour, Resource Valuation and Competition in Electricity Markets
AbstractBy means of a suitable Bayesian game we study spot electricity markets from a structural point of view. We address the problem of individual and aggregate eficciency and we show how to value water from market observables. We compare the former to engineering methods and apply our methodology to Colombian spot electricity market. Our results show that big gas and small hydro plants overbid, resources are undervalued by engineering costs and aggregate costs would have been considerably smaller if agents had played optimally. Revealed costs show a substantial gain in eficciency in the Vickrey auction compared to the actual uniform auction.
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Bibliographic InfoPaper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 006856.
Date of creation: 07 Mar 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-11 (All new papers)
- NEP-CSE-2010-04-11 (Economics of Strategic Management)
- NEP-ENE-2010-04-11 (Energy Economics)
- NEP-IND-2010-04-11 (Industrial Organization)
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- Miguel Andrés Espinosa Farfán, 2009. "Una aproximación al problema de optimalidad y eficiencia en el sector eléctrico colombiano," DOCUMENTOS CEDE 005402, UNIVERSIDAD DE LOS ANDES-CEDE.
- Harry J. Paarsch & Han Hong, 2006. "An Introduction to the Structural Econometrics of Auction Data," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262162350, June.
- Espinosa, Miguel & Forero, German & Villaneda, Felipe, 2011. "The practice of the auction theory: The Colombian case," MPRA Paper 31150, University Library of Munich, Germany.
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