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Author: | Brandts, J. Pezanis-Christou, P. Schram, A. |
Title: | Competition with forward contracts: A laboratory analysis motivated by electricity market design |
Journal: | Economic Journal
2008 : JAN, VOL. 118:525, p. 192-214 |
Index terms: | competition electricity industry efficiency contracts markets |
Language: | eng |
Abstract: | Using experiments, this study explores the efficiency effects of adding the possibility of forward contracting to a spot market (here as: m). The focus is on the strategic implications of a forward m. Both quantity and supply function competition (as: cmp.) are considered. Compared is the effect of adding a contract m. to the introduction of an additional competitor. It is found that for both types of cmp. the introduction of a forward m. significantly lowers prices. The combination of supply function cmp. with a forward m. leads to high efficiency levels. |
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