We analyze the production of electricity from n power stations situated along a river in a dynamic model. Each power station's production of electricity is constrained by the quantity of water available to it (capacity constraint) as well as limitations of reservoir capacity (storage constraint). Due to the water flow, production from one power station affects the production capacity of the next downstream power station. We show that when no constraint (capacity or storage) is binding, competition dominates monopoly. We then provide some examples in which, because one power station is constrained, monopoly dominates competition. Finally, we illustrate the model with an empirical example.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Salerno, Italy in its series CSEF Working Papers with number
56.