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Selecting effective divestments in electricity generation markets


  • Federico, Giulio

    () (IESE Business School)

  • Lopez, Angel

    (IESE Business School)


We study the impact of electricity divestments in a stylised model where a dominant producer faces a competitive fringe with the same cost structure and is forced to sell some of its capacity. For a given demand level, the divestment which achieves the greatest reduction in prices can be several times more effective in reducing prices than a divestment of base load (or low-cost) plants. We extend this theoretical result to the case with variable electricity demand by considering a numerical example based on data from the Italian market.

Suggested Citation

  • Federico, Giulio & Lopez, Angel, 2010. "Selecting effective divestments in electricity generation markets," IESE Research Papers D/845, IESE Business School.
  • Handle: RePEc:ebg:iesewp:d-0845

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    References listed on IDEAS

    1. Antonio Argandoña & Heidi Hoivik, 2009. "Corporate Social Responsibility: One Size Does Not Fit All. Collecting Evidence from Europe," Journal of Business Ethics, Springer, vol. 89(3), pages 221-234, November.
    2. Argandoña, Antonio, 2003. "On ethical, social and environmental management systems," IESE Research Papers D/508, IESE Business School.
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    Divestments; market power; electricity; antitrust remedies;

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