Strategic Bidding in Electricity Pools with Short-Lived Bids: An Application to the Spanish Market
AbstractWe generalize von der Fehr and Harbord's (1993) multi-unit auction model for the case of a deterministic demand allowing for any technology mix and elastic demand in order to account for demand side bidding. We obtain a general characterization of the equilibrium and show that the Cournot model overestimates market power in pool markets. We simulate the Spanish electricity pool and show that price-cost margins substantially increased with the 1996 merger that took the industry from a six firm structure to its current four firm structure. This is almost equivalent to a nearly symmetric duopoly. The introduction of demand-side bidding is not likely to change this situation.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2567.
Date of creation: Sep 2000
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- K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
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- Natalia Fabra & Nils-Henrik von der Fehr & David Harbord, 2002.
"Designing Electricity Auctions,"
0211017, EconWPA, revised 31 Aug 2003.
- Natalia Fabra & Nils‐Henrik Fehr & David Harbord, 2006. "Designing electricity auctions," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 23-46, 03.
- Natalia Fabra & Nils-Henrik M. von der Fehr & David Harbord, 2006. "Designing Electricity Auctions," RAND Journal of Economics, The RAND Corporation, vol. 37(1), pages 23-46, Spring.
- Fabra, Natalia & Fehr, Nils-Henrik Von der & Harbord, David, . "Designing Electricity Auctions," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/5008, Universidad Carlos III de Madrid.
- Aitor Ciarreta & María Paz Espinosa, 2003. "Market Power In The Spanish Wholesale Electricity Market," Working Papers. Serie AD 2003-22, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Rajnish Kamat & Shmuel Oren, 2004. "Two-settlement Systems for Electricity Markets under Network Uncertainty and Market Power," Journal of Regulatory Economics, Springer, vol. 25(1), pages 5-37, January.
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