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Title:Strategic use of available capacity in the electricity spot market PDF Logo
Authors:LeCoq, Chloé
Issue Date:2002
Series/Report no.:SSE/EFI Working Paper Series in Economics and Finance 496
Abstract:The literature on deregulated electricity markets generally assumes available capacities to be given. In contrast, this paper studies a model where firms precommit to capacity levels before competing in a uniform price auction. The analysis sheds light on recent empirical findings that firms use their available capacity to obtain high market prices. There exist two equilibria where at least one firm withholds its available capacity to induce the maximum price. Moreover, in one equilibrium, the inefficient firm obtains a relatively large market share.
Subjects:spot market
capacity game
auction mechanism
electricity
JEL:C72
D43
D44
L13
L94
Document Type:Working Paper
Appears in Collections:SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics

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