EconPapers    
Economics at your fingertips  
 

Competition in cascades

Rodrigo Menon Simões Moita and Daniel Monte

No 456, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil)

Abstract: Hydroelectric generation is the main source of energy production in many countries. When firms operate in the same river, or in cascades, the output of an upstream firm is the input of its downstream rival. We build a dynamic stochastic duopoly model of competition in cascades and show that the decentralized market is efficient at the critical times when rain is infrequent, but inefficient when rain is more frequent. Market power is an issue when peak prices are sufficiently higher than off-peak prices: Upstream firms delay production in off-peak times, limiting their rival downstream generators' production in peak times.

New Economics Papers: this item is included in nep-com and nep-ene
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://bibliotecadigital.fgv.br/dspace/bitstream/1 ... 0456_Moita_Monte.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fgv:eesptd:456

Access Statistics for this paper

More papers in Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil) Contact information at EDIRC.
Bibliographic data for series maintained by Núcleo de Computação da FGV EPGE ().

 
Page updated 2019-06-09
Handle: RePEc:fgv:eesptd:456