Le Coq, Chloé () (Dept. of Economics, Stockholm School of Economics)
Abstract
The literature on deregulated electricity markets generally assumes available capacities to be given. In contrast, this paper studies a model where firms precommit to capacity levels before competing in a uniform price auction. The analysis sheds light on recent empirical findings that firms use their available capacity to obtain high market prices. There exist two equilibria where at least one firm withholds its available capacity to induce the maximum price. Moreover, in one equilibrium, the inefficient firm obtains a relatively large market share.
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Length: 27 pages Date of creation: 18 Apr 2002 Date of revision: Handle: RePEc:hhs:hastef:0496
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Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection D44 - Microeconomics - - Market Structure and Pricing - - - Auctions 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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