Oligopoly Equilibria in Electricity Contract Markets

James Bushnell

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: This paper examines the implications of forward contracting on oligopoly environments by extending the model of Allaz and Vila to an environment with multi- ple firms and increasing marginal cost. Estimates of key parameters of this model are taken from existing electricity markets to predict the market impact of one round of public contracting, such as those seen in auctions for retail provision and resource pro- curement. The results imply that, when forward contracts are present, the importance of supplier concentration is greatly magnified relative to other determinants unilateral market power such as demand elasticity.

Keywords: contracts; cournot competition; competition policy; electricity markets (search for similar items in EconPapers)
JEL-codes: L13 L94 (search for similar items in EconPapers)
Date: 2007-12-01
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Citations: View citations in EconPapers (91)

Published in Journal of Regulatory Economics, December 2007, vol. 32 no. 3, pp. 225-245

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Journal Article: Oligopoly equilibria in electricity contract markets (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:13135

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