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Incentives and coordination in vertically related energy markets

  • Micola, Augusto Rupérez
  • Banal-Estañol, Albert
  • Bunn, Derek W.

We present an agent-based model of a multi-tier energy market. We show how reward interdependence between strategic business units within a vertically integrated firm can increase its profits in oligopolistic energy markets. The effects are shown to be distinct from those of the raising rivals' costs model. In our case, higher prices relate to the nature of energy markets, which facilitate the emergence of financial netback effects.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 67 (2008)
Issue (Month): 2 (August)
Pages: 381-393

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Handle: RePEc:eee:jeborg:v:67:y:2008:i:2:p:381-393
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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