Strategic Withholding through Production Failures
AbstractAnecdotal evidence indicates that electricity producers use production failures to disguise strategic reductions of capacity in order to influence prices, but systematic evidence is lacking. We use a quasi-experimental set up and data from the Swedish energy market to examine such behavior. In a market without strategic withholding, the decision of reporting a failure should be independent of the market price. We show that marginal producers in fact base their decision to report a failure in part on prices, which indicates that failures are a result of economic incentives as well as of technical problems.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 1015.
Length: 31 pages
Date of creation: 31 Mar 2014
Date of revision:
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Electricity markets; Urgent Market Messages (UMMs); Unplanned failures;
Find related papers by JEL classification:
- L49 - Industrial Organization - - Antitrust Issues and Policies - - - Other
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-04-11 (All new papers)
- NEP-CSE-2014-04-11 (Economics of Strategic Management)
- NEP-ENE-2014-04-11 (Energy Economics)
- NEP-GER-2014-04-11 (German Papers)
- NEP-REG-2014-04-11 (Regulation)
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.:
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