Competition along a river: Decentralizing hydropower production

Stefan Ambec and Joseph A. Doucet
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Joseph A. Doucet: University of Alberta, Canada

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We analyze the production of electricity from n power stations situated along a river in a dynamic model. Each power station's production of electricity is constrained by the quantity of water available to it (capacity constraint) as well as limitations of reservoir capacity (storage constraint). Due to the water flow, production from one power station affects the production capacity of the next downstream power station. We show that when no constraint (capacity or storage) is binding, competition dominates monopoly. We then provide some examples in which, because one power station is constrained, monopoly dominates competition. Finally, we illustrate the model with an empirical example.

Keywords: Hydropower; Electricity; Competition; Regulation; Water (search for similar items in EconPapers)
JEL-codes: L10 L50 L94 Q48 (search for similar items in EconPapers)
Date: 2001-03-01
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (1)

Published in Canadian Journal of Economics, 2003, vol. 36, pages 587-607

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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:56

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