Supply Function Equilibria and Nonprofit-Maximizing Objectives

Junichi Haraguchi and Yuta Yasui

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the supply function equilibrium (SFE), which is often used in the analysis of multi-unit auctions such as wholesale electricity markets, among (partially) public firms. In a general model, we characterize the SFE of such firms and examine the properties of symmetric SFE. We show, analyzing an asymmetric SFE in a duopoly model with linear demand and quadratic cost functions, that, when a partially public firm weighs more on the social welfare, the supply functions of not only the partially public firm but also a profit maximizing firm are flatter at the equilibrium. We also confirm that in a linear-quadratic model, the SFE converges to the (inverse) marginal cost function when the firms' social concerns increase symmetrically in the industry.

Keywords: supply function equilibrium; electricity markets; partial privatization; corporate social responsibility; mixed oligopoly (search for similar items in EconPapers)
JEL-codes: H42 L13 L33 (search for similar items in EconPapers)
Date: 2017-11-03
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Supply function equilibria and nonprofit-maximizing objectives (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:82394

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