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Equilibrium Predictions in Wholesale Electricity Markets


  • Talat S. Genc

    () (Department of Economics,University of Guelph)

  • Pierre-Olivier Pineau


We review supply function equilibrium models and their predictions on market outcomes in the wholesale electricity auctions. We discuss how observable market characteristics such as capacity constraints, number of power suppliers, load distribution and auction format affect the behavior of suppliers and performance of the market. We specifically focus on the possible market power exerted by pivotal suppliers and the comparison between discriminatory and uniform-price auctions. We also describe capacity investment behavior of electricity producers in the restructured industry.

Suggested Citation

  • Talat S. Genc & Pierre-Olivier Pineau, 2010. "Equilibrium Predictions in Wholesale Electricity Markets," Working Papers 1015, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:2010-15.

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    References listed on IDEAS

    1. Jan Fidrmuc & Jarko Fidrmuc, 2003. "Disintegration and Trade," Review of International Economics, Wiley Blackwell, vol. 11(5), pages 811-829, November.
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    5. Puga, Diego & Venables, Anthony J, 1999. "Agglomeration and Economic Development: Import Substitution vs. Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 109(455), pages 292-311, April.
    6. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(2), pages 284-314, June.
    7. Markusen, James R. & Venables, Anthony J., 2007. "Interacting factor endowments and trade costs: A multi-country, multi-good approach to trade theory," Journal of International Economics, Elsevier, vol. 73(2), pages 333-354, November.
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    Cited by:

    1. repec:eee:dyncon:v:82:y:2017:i:c:p:142-164 is not listed on IDEAS
    2. Genc, Talat S., 2017. "The impact of lead time on capital investments," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 142-164.

    More about this item


    Electricity markets; Supply function equilibrium; Markov perfect equilibrium; electricity auctions; pivotal suppliers; capacity investment.;

    JEL classification:

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


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