nep-ind New Economics Papers
on Industrial Organization
Issue of 2005‒02‒01
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The More Cooperation, the More Competition? A Cournot Analysis of the Benefits of Electric Market Coupling By Benjamin F. Hobbs; Fieke A. M. Rijkers
  2. Strategic Behavior and Collusion: An Application to the Spanish Electricity Market. By Aitor Ciarreta; Carlos Gutierrez-Hita
  3. Fixed Price Dynamics versus Flexible Price Dynamics By Martin Currie; Ingrid Kubin

  1. By: Benjamin F. Hobbs; Fieke A. M. Rijkers
    Abstract: Market coupling in Belgian and Dutch markets would permit more efficient use of intercountry transmission, 1) by counting only net flows against transmission limits, 2) by improving access to the Belgian market, and 3) by eliminating the mismatch in timing between interface auctions and the energy spot market. A Cournot market model that accounts for the region’s transmission pricing rules and limitations is used to simulate market outcomes with and without market coupling. This accounts for 1) and 2). Market coupling improves social surplus in the order of 108 €/year, unless it encourages the largest producer in the region to switch from a price-taking strategy in Belgium to a Cournot strategy due to a perceived diminishment of the threat of regulatory intervention. Benefit to Dutch consumers depends on the behavior of this company. The results illustrate how large-scale oligopoly models can be useful for assessing market integration.
    Keywords: Electric power, Electric transmission, Liberalization, Oligopoly, Complementarity models, Computational models, Netherlands, Belgium, France, Germany, Market Coupling
    Date: 2005–01
  2. By: Aitor Ciarreta (Universidad del País Vasco (Spain)); Carlos Gutierrez-Hita (Universitat Jaume I Castellón)
    Keywords: collusion, repeated games, electricity market
    JEL: L11 L13 L51
    Date: 2005–01–27
  3. By: Martin Currie (School of Economic Studies, Victoria University of Manchester, UK); Ingrid Kubin (Department of Economics, Vienna University of Economics & B.A.)
    Abstract: This paper contrasts the dynamical behaviors of fixed and flexible price regimes for a monopolistically competitive manufacturing sector in which firms base decisions on expectations about product demands.
    JEL: C62 D43 L13
    Date: 2005–01

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