Price Coordination in Vertically Integrated Electricity Markets: Theory and Empirical Evidence

Bruno Bosco, Parisio Lucia and Matteo Pelagatti

The Energy Journal, 2016, vol. 37, issue 1, 181-194

Abstract: We analyse vertical integration between generators and retailers in electricity markets and we discuss the implications for price decisions of the presence of asymmetric (cost) information in a simple P-A framework. We analyze a situation in which generators post supply bids taking into account the profit of the entire vertically integrated group they belong to. We then discuss the way in which the degree of vertical integration affects this bidding strategy. Using Italian electricity auction data we show how bid prices posted by a pivotal producer are significantly influenced by variables incorporating vertical integration into the econometric model.

Keywords: Regulation; vertical integration; electricity markets; strategic delegation (search for similar items in EconPapers)
Date: 2016
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Journal Article: Price coordination in vertically integrated electricity markets. Theory and empirical evidence (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:37:y:2016:i:1:p:181-194

DOI: 10.5547/01956574.37.1.bbos

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