Strategic Withholding through Production Failures

Sara Fogelberg and Ewa Lazarczyk ()

No 1015, Working Paper Series from Research Institute of Industrial Economics

Abstract: Anecdotal evidence indicates that electricity producers use production failures to disguise strategic reductions of capacity in order to influence prices, but systematic evidence is lacking. We use a quasi-experimental set up and data from the Swedish energy market to examine such behavior. In a market without strategic withholding, the decision of reporting a failure should be independent of the market price. We show that marginal producers in fact base their decision to report a failure in part on prices, which indicates that failures are a result of economic incentives as well as of technical problems.

Keywords: Electricity markets; Urgent Market Messages (UMMs); Unplanned failures (search for similar items in EconPapers)
JEL-codes: L49 L94 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-03-31
New Economics Papers: this item is included in nep-cse, nep-ene, nep-ger and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Strategic Withholding through Production Failures (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1015

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