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Market power in electricity wholesale spot markets is more likely if there is market segmentation. We show that principal component analysis is a natural tool for the qualitative and quantitative assessment of the presence of local markets. We study whether the New Zealand market has been a national market or a set of local markets since its inception in 1996 and find that increased competition induced some segmentation that was eliminated by transmission enhancement and the introduction of generation downstream from the constrained circuits. Transmission investment policy that ensures one market will contribute to the efficiency of electricity, water, and related other markets. ( JEL D4, L1, L4) 相似文献
3.
In this paper we report the findings of an economic experiment that examines the effects of an automated mitigation procedure
(AMP) on prices and capacity investment choices of suppliers in a wholesale electricity market. Specifically, we examine the
effects of different market power incentives on markets with and without an AMP. While we find that the AMP does not affect
overall investment in capacity, the most significant determinant of long-run prices is investment in new capacity. The AMP
also does not reduce long-run prices relative to markets without an AMP. Furthermore, our participants successfully manipulated
the AMP’s trigger price.
The data and a sample copy of the instructions are available upon request. This article reflects the opinions of the authors
and does not necessarily reflect the position of the Federal Energy Regulatory Commission or any individual Commissioner. 相似文献
4.
Theodore J. Kury 《Journal of Regulatory Economics》2013,43(2):147-167
In 1996, the Federal Energy Regulatory Commission (FERC) sought to “remove impediments to competition in the wholesale bulk power marketplace and to bring more efficient, lower cost power to the Nation’s electricity consumers” through a series of market rules. A product of these rules was the establishment of regional transmission organizations (RTOs) and independent system operators (ISOs) charged with facilitating equal access to the transmission grid for electricity suppliers. Whether these changes in market structure have succeeded in achieving FERC’s goal to provide “lower cost power to the Nation’s electricity consumers” remains an open question. This paper utilizes a panel data set of the 48 contiguous United States and a treatment effects model in first differences to determine whether there have been changes in delivered electric prices as a result of the establishment of ISOs and RTOs. To avoid the confounding effects of electric restructuring, the model is estimated with the full panel data set, and then again without the states that have restructured their electric markets. This estimation shows that electricity prices fall approximately 4.8 % in the first 2 years of an ISO’s operation and that this result is statistically significant. However, this result is dependent on the presence of states that restructured their electricity markets. When these restructured states are removed from the data set the price effects of RTOs become indistinguishable from zero. The paper concludes that rate agreements are the principal source of the observed decrease in prices and that RTOs have not had the desired effect on electricity prices. 相似文献
5.
Patrick Leoni 《Economic Theory》2008,34(1):189-206
In a standard General Equilibrium framework, we consider an agent strategically using her large volume of trade to influence
asset prices to increase her consumption. We show that, as in Sandroni (Econometrica 68:1303–1341, 2000) for the competitive
case, if markets are dynamically complete and some general conditions on market preferences are met then this agent’ long-run
consumption will vanish if she makes less accurate predictions than the market, and will maintain her market power otherwise.
We thus argue that the Market Selection Hypothesis extends to this situation of market power, in contrast to Alchian (J Pol
Econ 58:211–221, 1950) and Friedman (Essays in Positive Economics, University of Chicago Press, Chicago, 1953) who claimed
that this selection was solely driven by the competitiveness of markets.
I would like to thank T. Hens, A. Kirman and A. Sandroni for many stimulating conversations and encouragements. Two anonymous
referees also provided very valuable comments. 相似文献
6.
The Impact of the EU ETS on Prices,Profits and Emissions in the Power Sector: Simulation Results with the COMPETES EU20 Model 总被引:1,自引:1,他引:0
This paper analyses the impact of the EU Emissions Trading Scheme (ETS) on electricity prices, in particular on wholesale
power markets across the EU. To study this impact, this paper discusses the major results of a bottom-up modelling analysis
of the implications of emissions trading for the performance of the wholesale power market in 20 European countries. The analyses
show that a significant part of the costs of (freely allocated) CO2 emission allowances is passed through to power prices, resulting in higher electricity prices for consumers and additional
(‘windfall’) profits for power producers, even in cases of full auctioning. In addition, they show that the ETS-induced increases
in power prices depend not only on the level of CO2 prices but also on the structure of the power market, i.e., the incidence of market power, and the price responsiveness of
power demand. Finally, the analyses show that the internalization and pass-through of carbon costs are crucial elements in
a policy regime to reduce CO2 emissions by both changing the mix of power generation technologies and lowering total electricity demand. 相似文献
7.
This paper examines market design issues for reliability management in competitive power markets. The institutional structure is characterized by a power exchange that conducts electricity market trading, a system operator that operates the electric power system, and a property right system for transimission pricing. In a competitive market, priority insurance fosters market information for determining efficient system reliability levels and induces system operator to maintain system security efficiently. A six-node network example is examined to illustrate the basic insights. 相似文献
8.
This paper analyzes the interrelationship among competition, market size and innovation by using the data from total 37 industries
in China within a simultaneous equations model. It finds that: (1) Competition and innovation are mutually-enhanced, and this
is the consequence of the long-run Darwinian effect in competitive market; (2) Market size and innovation are also positively
correlated, because firms’ innovation is essentially demand-oriented (market-oriented), and innovation impelling technological
progress will finally increase market size; (3) Between competition and market size, the effect of competition on market size
is ambiguous, while the reverse is significantly positive. The policy implication of this paper is as follows: under the condition
that China has especially huge market size and market demand, the industry policy of intensifying competition can stimulate
firms’ persistent demand-oriented innovation.
相似文献
9.
Measuring market power and the efficiency of Alberta's restructured electricity market: An energy‐only market design
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We measure the degree of market power execution and inefficiencies in Alberta's restructured electricity market. Using hourly wholesale market data from 2008 to 2014, we find that firms exercise substantial market power in the highest demand hours with limited excess production capacity. The degree of market power execution in all other hours is low. Market inefficiencies are larger in the high demand hours and elevate production costs by 6.7%–19% above the competitive benchmark, with an average of 13%. This reflects 2.1% of the average market price across all hours. A recent regulatory policy clarifies that certain types of unilateral market power execution is permitted in Alberta. We find evidence that suggests that strategic behaviour changed after this announcement. Market power execution increased. We illustrate that the observed earnings are often sufficient to promote investment in natural gas based technologies. The rents from market power execution can exceed the estimated capacity costs for certain generation technologies. However, we demonstrate that the energy market profits in the presence of no market power execution are generally insufficient to promote investment in new generation capacity. This stresses the importance of considering both short‐run and long‐run electricity market performance measures. 相似文献
10.
Clemens Heuson 《Environmental and Resource Economics》2010,47(3):349-369
Studies dealing with the optimal choice of pollution control instruments under uncertainty have invariably taken it for granted
that regulated firms face perfectly competitive markets. By introducing the product market into the stochastic framework of
Weitzman (Rev Econ Stud 41:477–491, 1974), this paper shows for the case of a polluting symmetric Cournot oligopoly that Weitzman’s
policy rule for choosing emission standards versus taxes with uncertain abatement costs is biased in the presence of market
power. Since the oligopolists take into account their influence on the market price, their total abatement effort, including
the restriction of output, is less vulnerable to miscalculations of the tax rate compared to price-taking firms. Consequently,
the comparative advantage of instruments is shifted in favour of taxes. In a further step, the provided policy recommendations
are generalised by abolishing the assumption that firms are symmetric. 相似文献
11.
Abstract. This paper proposes a pricing mechanism, optional real-time pricing (RTP), with day-ahead hourly prices, that exploits the potential offered by a competitive wholesale power market. When an electric utility offers the option to its industrial customers, the retail prices are based on an existing Hopkinson tariff and expectations as to the wholesale market's next-day hourly spot prices. The proposed RTP mechanism is Pareto-superior to the tariff in that it assures both the utility and the customer of profits that will be at least as great as under the tariff. 相似文献
12.
This article examines the evolution of the rules that govern central-local government relations in the Chinese political economy.
Although the federalism that accompanied China’s market reforms has substantially facilitated economic growth, it has also
created powerful incentives for local authorities to abuse their powers, significantly increasing the agency costs to the
central government of maintaining political stability and creating a national market. This article analyzes the institutional
design of the nascent Anti-Monopoly Law (AML), known to officials and academics as China’s new “Economic Constitution”. It
demonstrates that the major purpose of the AML is to break up the so-called “administrative monopolies”, or bureaucratic fiefdoms
over local economies. In contrast to existing academic treatment, it will study the AML in the framework of competition for
influence over economic policy between rent-seeking central and local actors. It argues that the AML, despite its stated purposes,
is indeed designed to reduce the policy-making powers of the regions to the comparative advantage of the central government.
The AML can thus be modeled as a new constitutional contract that the center wishes to enter into with the localities in
order to repeal the existing rules of decentralization. It will be further shown that the AML, reflecting the allocation of
power in the Chinese state, prioritizes the political imperatives of recentralization over the facilitation of competitive
markets. 相似文献
13.
This paper analyzes the efficiency of an explicit ex ante auction for network access to facilitating trade between two separate,
but linked, electricity wholesale markets. It is generally assumed that greater regional interconnection will mitigate the
exercise of local market power by dominant generators, but we show analytically that when a dominant player has access to
a more competitive neighboring market, and is also the lowest cost producer, the exercise of market power becomes attractive
and can have negative consumer welfare implications. For an empirical analysis, we use a unique data set of daily company-level
flow nominations on the Anglo-French Interconnector (IFA). This provides a clear case study, “free of loop flows” (with the
IFA being the only link between the UK and France). We are able to identify evident inefficiencies in the market behavior,
for which several explanations, including market power, may contribute. 相似文献
14.
Citizens and organizations representing them play an increasingly important role in markets for environmental quality, but
much remains to be learned about how their participation affects these markets. We analyze the effects of allowing a community
of citizens to trade pollution permits in an imperfectly competitive permit market. Allowing the community to trade directly
reveals its preferences, which enhances welfare. However, community participation may also exacerbate distortions due to market
power, even though the community itself trades competitively. Including the community in permit distribution may exacerbate
market power distortions by affecting a dominant trader’s propensity to participate in the permit market. Second, the community’s
demand/supply for permits may be more inelastic than other traders and worsen distortions due to market power. We illustrate
in an example that these negative effects on competition can dominate the positive effect from preference revelation through
the market place.
相似文献
15.
Beat Hintermann 《Environmental and Resource Economics》2011,49(3):327-349
Market power in permit markets has been examined in some detail following the seminal work of Hahn (Q J Econ 99(4):753–765,
1984), but the effect of free allocation on price manipulation with market power in both product and permit market has not been
fully addressed. I show that in this case, the threshold of free allocation above which a dominant firm will set the permit
price above its marginal abatement costs is below its optimal emissions in a competitive market, and that overall efficiency
cannot be achieved by means of permit allocation alone. In addition to being of general economic interest, this issue is relevant
in the context of the EU ETS. I find that the largest German, UK and Nordpool power generators received free allowances in
excess of the derived threshold. Conditional on having price-setting power in both the electricity and permit markets, these
firms would have found it profitable to manipulate the permit price upwards despite being net permit buyers. 相似文献
16.
Environmental policy design has much to gain from a better understanding of existing voluntary behaviour and motivations.
In laboratory experiments, participants often exhibit social preferences such as altruism, spite, reciprocity and notions
of fairness. In contrast, traditional neoclassical theory assumes that people act rationally in a way that maximises their
self-interest. In environmental markets, social preferences and self-interest interact. We apply experimental economics to
test the hypothesis that social preferences are not maintained in the presence of a competitive market institution. In the
initial public goods game, many participants were prepared to make costly voluntary contributions. However the introduction
of the market institution triggered a ‘market instinct’ in experimental participants. They abandoned the social preferences
they were previously expressing and became self-interested profit maximisers. This self-interested behaviour persisted even
after the market institution was discontinued. These findings are important to understanding the role and impact of markets
for environmental policy. 相似文献
17.
Journal of Regulatory Economics - In Europe, gas market mergers aim at reducing restrictions on gas wholesale markets. Market mergers also allow network users to book transport capacity at... 相似文献
18.
Within the last 25 years, liberalization (deregulation) of electricity markets around the world has been undertaken with the goal of replacing long-standing monopoly rights with fully competitive markets. In addition, many nations have begun employing “tradable green certificate” systems to promote electricity generation from renewable (“green”) energy sources (wind, solar, biomass, hydroelectric, etc.), with the primary objective of mitigation of greenhouse gas emissions from fossil fuel (“black”) producers. In this paper, we examine some welfare implications of the use of green certificate systems in electricity markets under alternative market structures. We demonstrate that under a wide variety of scenarios, an oligopolistic market structure may perform better in terms of welfare than a competitive market structure. We also demonstrate that there will typically be an optimal level of market power summarized by a conjectural variations parameter that depends on the cost structure of both green and black firms. Our model provides insights into the policy challenge of electricity market design and suggests an approach that could be applied in a more general model. 相似文献
19.
Shu-hua Chang 《International Review of Economics》2006,53(1):1-15
Labor market structures may have important effects on imperfectly competitive rivalries between firms. This paper examines
the consequences of unionization for the rivalry between duopoly firms in two types of contracts: vertical integration and
vertical separation. If a franchise fee is used to extract the retailer’s profit, then it is in the individual interest of
each manufacturer to choose vertical separation and charge his retailer a wholesale price in excess of the unit production
cost, depending on the specific time structures. These arguments could make integration preferable for the manufacturer if
the wage bargaining power of the union is relatively powerful. 相似文献
20.
Christian A. Vossler Timothy D. Mount Robert J. Thomas Ray D. Zimmerman 《Journal of Regulatory Economics》2009,36(1):44-59
This paper presents the results from an auction experiment using industry professionals and student participants who compete
in a simulated wholesale market for electricity. Motivated by the intervention by FERC in response to the “meltdown” of the
California spot market, we investigate the effect of including a “soft” price cap in a uniform price auction as a means of
mitigating high prices. When prices are driven above the soft cap, offer curves become flat, in contrast to the hockey stick
shape observed in a typical uniform price auction for electricity. This flat offer curve leads to market prices that are relatively
insensitive to both generation costs and demand reductions.
相似文献