Horizontal subcontracting and intermittent power generation

Jan Bouckaert and Geert van Moer

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: Intermittent power sources enable firms to reduce costs by horizontally subcontracting generation. Dispatchable units serve as a strategic device, even when never used, since their availability credibly limits the price paid for subcontracting. Security of supply measures motivated by too low plant profitability therefore underestimate firms’ unilateral incentive to install dispatchable units.

Keywords: Subcontracting; Intermittency; Security of supply; Dispatchable units (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2014-12
New Economics Papers: this item is included in nep-com and nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2014031

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