Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192502 
Year of Publication: 
2007
Series/Report no.: 
Discussion Papers No. 520
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
In order to analyse the consequences of uncertainty for prices and efficiency in a hydropower system, we apply a two-period model with uncertainty in water inflow. We study three different market structures, perfect competition, monopoly and oligopoly and stress the importance of the shape of the demand function under different distributions of water inflow. The uncertainty element creates possibilities of exercising market power depending on the distribution of uncertainty among producers. The introduction of thermal power into the hydropower market has an impact on the residual demand function, which is important for the hydropower producers' possibilities of exercising market power.
Subjects: 
hydropower
uncertainty
electricity
thermal power
demand functions
monopoly
duopoly
JEL: 
D40
Q11
Q41
L10
Document Type: 
Working Paper

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