Production intermittence in sport markets

Augusto Ruperez Micola and Albert Banal-Estanol

LSF Research Working Paper Series from Luxembourg School of Finance, University of Luxembourg

Abstract: This paper analyses the influence of production intermittence on spot markets. We use both game theory and an adaptation of the Camerer and Ho (1999) behavioural model. Controlling for costs, we find that intermittent technologies yield lower prices when incumbents have individual market power, but are higher when they do not have it. This happens both when firms are risk-neutral and risk-averse, and also under different intermittence and ownership configurations.Replacing high-cost assets with low-cost ones results in prices that are higher than when they are left to co-exist. The findings have implications for, among others, wholesale electricity markets, in which wind power is increasingly important.

Keywords: behavioural economics; experience-weighted attractions (EWA); intermittence; production technology; spot markets. (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:crf:wpaper:11-15

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