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An experimental analysis of the effects of automated mitigation procedures on investment and prices in wholesale electricity markets

Lynne Kiesling and Bart Wilson

Journal of Regulatory Economics, 2007, vol. 31, issue 3, 313-334

Abstract: In this paper we report the findings of an economic experiment that examines the effects of an automated mitigation procedure (AMP) on prices and capacity investment choices of suppliers in a wholesale electricity market. Specifically, we examine the effects of different market power incentives on markets with and without an AMP. While we find that the AMP does not affect overall investment in capacity, the most significant determinant of long-run prices is investment in new capacity. The AMP also does not reduce long-run prices relative to markets without an AMP. Furthermore, our participants successfully manipulated the AMP’s trigger price. Copyright Springer Science+Business Media, LLC 2007

Keywords: Electric power markets; Automated mitigation procedures; investment; Price caps; C92; L11; L94 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (13)

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DOI: 10.1007/s11149-006-9018-4

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