Production intermittence in sport markets
AbstractThis paper analyses the influence of production intermittence on spot markets. We use both game theory and an adaptation of the Camerer and Ho (1999) behavioural model. Controlling for costs, we find that intermittent technologies yield lower prices when incumbents have individual market power, but are higher when they do not have it. This happens both when firms are risk-neutral and risk-averse, and also under different intermittence and ownership configurations.Replacing high-cost assets with low-cost ones results in prices that are higher than when they are left to co-exist. The findings have implications for, among others, wholesale electricity markets, in which wind power is increasingly important.
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Bibliographic InfoPaper provided by Luxembourg School of Finance, University of Luxembourg in its series LSF Research Working Paper Series with number 11-15.
Date of creation: 2011
Date of revision:
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More information through EDIRC
behavioural economics; experience-weighted attractions (EWA); intermittence; production technology; spot markets.;
Other versions of this item:
- GABSZEWICZ, Jean J. & VAN YPERSELE, Tanguy & ZANAJ, Skerdilajda, 2011. "Does the seller of a house facing a large number of buyers always decrease its price when its first offer is rejected?," CORE Discussion Papers 2011049, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
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