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Retail Competition and Electricity Contracts

Author

Listed:
  • Richard Green

    (The Business School University of Hull)

Abstract

Long-term contracts for electricity can counter market power and reduce prices in short-term markets. If electricity retailers face competition, however, companies signing long-term contracts are exposed to the risk that a fall in short-term prices would allow rivals to buy on the spot market and undercut them. This paper combines a model of electricity retailing and a Cournot model of competition in the wholesale markets to show that if retailers are sufficiently risk-averse, their reluctance to sign long-term contracts could cause a sizeable increase in prices.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Richard Green, 2003. "Retail Competition and Electricity Contracts," Working Papers EP33, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:ep33
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    File URL: https://www.jbs.cam.ac.uk/wp-content/uploads/2023/12/eprg-wp33.pdf
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    More about this item

    Keywords

    Electricity; contract markets; retail competition;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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