Selecting effective divestments in electricity generation markets
AbstractWe study the impact of electricity divestments in a stylised model where a dominant producer faces a competitive fringe with the same cost structure and is forced to sell some of its capacity. For a given demand level, the divestment which achieves the greatest reduction in prices can be several times more effective in reducing prices than a divestment of base load (or low-cost) plants. We extend this theoretical result to the case with variable electricity demand by considering a numerical example based on data from the Italian market.
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Bibliographic InfoPaper provided by IESE Business School in its series IESE Research Papers with number D/845.
Length: 20 pages
Date of creation: 03 Feb 2010
Date of revision:
Divestments; market power; electricity; antitrust remedies;
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