Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103733
Authors: 
Aichele, Markus
Year of Publication: 
2014
Series/Report no.: 
University of Tübingen Working Papers in Economics and Finance 76
Abstract: 
I model the strategic interaction between firms, that face decisions on investment, forward contracts and spot market quantities. For an investment decision that takes place after firms have contracted forward but before firms compete on the spot market (medium term investment), competition becomes fierce. Thus, the efficiency gains from forward trading found by Allaz and Villa (1993) still are present. However, for an investment that takes place before firms contract forward (long term investment), competition becomes rather weak. When investment matters, from a welfare point of view the desirability of forward trading critically depends on the structure of decision making.
Subjects: 
Industrial Organization
Strategic Investment
Forward Trading
Cournot Competition
Energy Markets
JEL: 
L13
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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