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Modeling the strategic trading of electricity assets

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Author Info
Fernando S. Oliveira () (Operational Research and Systems Warwick Business School)
Derek W. Bunn (London Business School)
London Business School

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Abstract

We analyze how strategic asset trading can be used to gain competitive advantage. In the case of electricity markets, companies seek to improve the value of their generating portfolios by acquiring, or selling, power plants. Accordingly, we derive the basic determinants of plant value, explaining how a particular productive asset may have different values for different firms. From this, we develop an evolutionary model to understand how market structure interacts with strategic asset trading to increase the competitive advantage of firms, and furthermore, how this depends upon the actual price-setting microstructure in the wholesale market itself

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File URL: http://repec.org/sce2006/up.8909.1140800087.pdf
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Publisher Info
Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2006 with number 235.

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Date of creation: 04 Jul 2006
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Handle: RePEc:sce:scecfa:235

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Web page: http://comp-econ.org/
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Related research
Keywords: Competitive advantage computational learning auctions asset trading simulation electricity markets

Find related papers by JEL classification:
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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  1. Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, vol. 92(5), pages 1376-1405, December. [Downloadable!] (restricted)
  2. Timothy N. Cason & Daniel Friedman, 1997. "Price Formation in Single Call Markets," Econometrica, Econometric Society, vol. 65(2), pages 311-346, March.
  3. Borenstein, Severin & Bushnell, James & Kahn, Edward & Stoft, Steven, 1995. "Market power in California electricity markets," Utilities Policy, Elsevier, vol. 5(3-4), pages 219-236. [Downloadable!] (restricted)
  4. David F. Midgley & Robert E. Marks & Lee G. Cooper, 1995. "Breeding Competitive Strategies," Working Papers 95-06-052, Santa Fe Institute.
  5. James Nicolaisen & Valentin Petrov & Leigh Tesfatsion, 2000. "Market Power and Efficiency in a Computational Electricity Market with Discriminatory Double-Auction Pricing," Computational Economics 0004005, EconWPA. [Downloadable!]
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  6. Borenstein, Severin & Bushnell, James, 1999. "An Empirical Analysis of the Potential for Market Power in California's Electricity Industry," Journal of Industrial Economics, Blackwell Publishing, vol. 47(3), pages 285-323, September. [Downloadable!] (restricted)
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  7. Green, Richard J & Newbery, David M, 1992. "Competition in the British Electricity Spot Market," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 929-53, October. [Downloadable!] (restricted)
    Other versions:
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