Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/208528 
Year of Publication: 
2006
Series/Report no.: 
Working paper No. 11-2006
Publisher: 
Copenhagen Business School (CBS), Department of Economics, Frederiksberg
Abstract: 
We examine the effects of reorganizing electricity markets on ca- pacity investments, retail prices and welfare when demand is uncer- tain. We study the following market configurations: (i) integrated monopoly, (ii) integrated duopoly with wholesale trade, and (iii) sep- arated duopoly with wholesale trade. Assuming that wholesale prices can react to changes in retail prices (but not vice versa), we find that generators install sufficient capacity to serve retail demand in each market configuration, thus avoiding black-outs. Furthermore, aggre- gate capacity levels and retail prices are such that the separated (inte- grated) duopoly with wholesale trade performs best (worst) in terms of welfare.
Subjects: 
Electricity
Investments
Generating Capacities
Vertical Integration
Monopoly and Competition
JEL: 
D42
D43
D44
L11
L12
L13
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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