Incentives and coordination in vertically related energy markets

Augusto Rupérez Micola, Albert Banal-Estanol and Derek W. Bunn

Journal of Economic Behavior & Organization, 2008, vol. 67, issue 2, 381-393

Abstract: We present an agent-based model of a multi-tier energy market. We show how reward interdependence between strategic business units within a vertically integrated firm can increase its profits in oligopolistic energy markets. The effects are shown to be distinct from those of the raising rivals' costs model. In our case, higher prices relate to the nature of energy markets, which facilitate the emergence of financial netback effects.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:67:y:2008:i:2:p:381-393

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