Spot Market Competition in the UK Electricity Industry
AbstractWith particular reference to the structure of the U.K. industry, price competition in a deregulated wholesale market for electricity is modeled as a sealed-bid multiple-unit auction with a random number of units. It is argued that, under the existing regulatory rules, one must expect volatile prices, above marginal cost pricing, and inefficient dispatching. Evidence from the pricing performance of the U.K. industry is presented and shown to be compatible with the model predictions. The authors also discuss alternative regulatory rules and show that offering to supply at marginal cost can be induced as a dominant strategy for all generators, thereby securing efficient dispatching. Copyright 1993 by Royal Economic Society.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 09/1992.
Length: 75 pages
Date of creation: 1992
Date of revision:
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Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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deregulation ; electricity ; prices ; competition;
Other versions of this item:
- von der Fehr, Nils-Henrik Morch & Harbord, David, 1993. "Spot Market Competition in the UK Electricity Industry," Economic Journal, Royal Economic Society, vol. 103(418), pages 531-46, May.
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