Market Power and Technological Bias: The Case of Electricity Generation

Paul Twomey and Karsten Neuhoff ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: It is difficult to elminated all market power in electricity markets and it is therefore frequently suggested that some market power should be tolerated: extra revenues contribute to fixed cost recovery, facilitate investment and increase security of supply. This suggestion implicitly assumes all generation technologies benefit equally from market power. We assess a mixture of conventional and intermittent generation, eg coal plants and wind power. If all output is sold in the spot market, then intermittent generation benefits less from market power than conventional generation. Forward contracts or option contracts reduce the level of market power but bias against intermittent generators persists.

Keywords: market power; technology choice; electricity markets; intermittent output; forward and option contracting (search for similar items in EconPapers)
JEL-codes: D42 D43 L12 L13 Q42 (search for similar items in EconPapers)
Pages: 23
Date: 2005-08
New Economics Papers: this item is included in nep-com, nep-ene, nep-ino and nep-mic
Note: EPRG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.electricitypolicy.org.uk/pubs/wp/eprg0501.pdf (application/pdf)

Related works:
Working Paper: Market Power and Technological Bias: The Case of Electricity Generation (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0532

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