Vertical integration and capacity investment in the electricity sector

David P. Brown and David Sappington

Journal of Economics & Management Strategy, 2022, vol. 31, issue 1, 193-226

Abstract: We examine the incentives for and the effects of vertical integration in the electricity sector. We find that vertical integration often reduces retail prices and increases industry capacity investment, consumer surplus, and total welfare. Unilateral vertical integration often is profitable, and so arises in equilibrium. However, ubiquitous vertical integration can reduce aggregate industry profit.

Date: 2022
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https://doi.org/10.1111/jems.12445

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Working Paper: Vertical Integration and Capacity Investment in the Electricity Sector (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:31:y:2022:i:1:p:193-226

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