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Nuclear Capacity Auctions

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  • Sven-Olof Fridolfsson
  • Thomas P. Tangers

Abstract

We propose nuclear capacity auctions as a means to correcting the incentives for investing in nuclear power. In particular, capacity auctions open the market for large-scale entry by outside firms. Requiring licensees to sell a share of capacity as virtual power plant contracts increases auction efficiency by mitigating incumbent producers’ incentive to bid for market power. A motivating example is Sweden’s policy reversal to allow new nuclear power to replace old reactors.

Suggested Citation

  • Sven-Olof Fridolfsson & Thomas P. Tangers, 2015. "Nuclear Capacity Auctions," The Energy Journal, , vol. 36(3), pages 247-262, July.
    • Handle: RePEc:sae:enejou:v:36:y:2015:i:3:p:247-262
    DOI: 10.5547/01956574.36.3.sfri
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    References listed on IDEAS

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    Cited by:

    1. Erik Lundin, 2021. "Market Power and Joint Ownership: Evidence from Nuclear Plants in Sweden," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 485-536, September.
    2. Yusuke Ikuta & Takashi Yanagawa, 2023. "Ownership structure of nuclear power plants for fair competition and efficiency: private low-cost access versus public ownership," International Journal of Economic Policy Studies, Springer, vol. 17(1), pages 307-330, February.
    3. Edquist, Harald & Henrekson, Magnus, 2013. "Product Market Reforms and Incentives to Innovate in Sweden," Working Paper Series 986, Research Institute of Industrial Economics.

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    More about this item

    Keywords

    Capacity auctions; Investments; Market power; Nuclear power; Virtual power plants;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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