Investments in Electricity Generation Capacity under Different Market Structures with Price Responsive Demand

Abstract: Investments in Generation Capacities by a social planner, by a monopolist and by two competing firms are compared when electricity demand is uncertain but price responsive. A unit price auction determines the electricity price when firms compete. Firms know the level of demand when they bid their capacities. With simultaneous capacity choices total capacities are always larger than with a monopoly if a subgame perfect equilibrium in pure strategies exists. With sequential capacity choices existence is always ensured and the aggregate capacity is smaller in the duopoly than with a monopolist if capacity costs are very low. Capacities always fall short of the socially efficient level.

New Economics Papers: this item is included in nep-ene and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://userpage.fu-berlin.de/%7Elsbester/papers/strom4.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

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:bef:lsbest:016

Access Statistics for this paper

More papers in Departmental Working Papers
Bibliographic data for series maintained by XXX ( this e-mail address is bad, please contact ).