An experimental analysis of the effects of automated mitigation procedures on investment and prices in wholesale electricity markets
In this paper we report the findings of an economic experiment that examines the effects of an automated mitigation procedure (AMP) on prices and capacity investment choices of suppliers in a wholesale electricity market. Specifically, we examine the effects of different market power incentives on markets with and without an AMP. While we find that the AMP does not affect overall investment in capacity, the most significant determinant of long-run prices is investment in new capacity. The AMP also does not reduce long-run prices relative to markets without an AMP. Furthermore, our participants successfully manipulated the AMP’s trigger price. Copyright Springer Science+Business Media, LLC 2007
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 31 (2007)
Issue (Month): 3 (June)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/industrial+organization/journal/11149/PS2|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Borenstein, Severin & Bushnell, James, 1999.
"An Empirical Analysis of the Potential for Market Power in California's Electricity Industry,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 47(3), pages 285-323, September.
- Severin Borenstein & James Bushnell, 1998. "An Empirical Analysis of the Potential for Market Power in California's Electricity Industry," NBER Working Papers 6463, National Bureau of Economic Research, Inc.
- Catherine D. Wolfram, 1999. "Measuring Duopoly Power in the British Electricity Spot Market," American Economic Review, American Economic Association, vol. 89(4), pages 805-826, September.
- Kahn, Alfred E., 2002. "The Adequacy of Prospective Returns on Generation Investments under Price Control Mechanisms," The Electricity Journal, Elsevier, vol. 15(2), pages 37-46, March.
- Dean V. Williamson & Céline Jullien & Lynne Kiesling & Carine Staropoli, 2006. "Investment Incentives and Market Power: An Experimental Analysis," EAG Discussions Papers 200605, Department of Justice, Antitrust Division.
- Steven L. Puller, 2007. "Pricing and Firm Conduct in California's Deregulated Electricity Market," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 75-87, February.
- Davis, Douglas D. & Holt, Charles A., 2008. "The Exercise of Market Power in Laboratory Experiments," Handbook of Experimental Economics Results, Elsevier.
- Holt, Charles A, 1989. "The Exercise of Market Power in Laboratory Experiments," Journal of Law and Economics, University of Chicago Press, vol. 32(2), pages 107-130, October.
- Borenstein, Severin, 2000. "Understanding Competitive Pricing and Market Power in Wholesale Electricity Markets," The Electricity Journal, Elsevier, vol. 13(6), pages 49-57, July.
- Borenstein, Severin, 1999. "Understanding Competitive Pricing and Market Power in Wholesale Electricity Markets," Competition Policy Center, Working Paper Series qt00p2p3wv, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- 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. Full references (including those not matched with items on IDEAS)