DocumentCode
2804585
Title
Price caps and fluctuating demands in electricity markets: Experimental evidence of competitive bidding
Author
Le Coq, Chloé ; Orzen, Henrik
Author_Institution
SITE (Stockholm Sch. of Econ.), Stockholm, Sweden
fYear
2012
fDate
10-12 May 2012
Firstpage
1
Lastpage
4
Abstract
This paper reports results from a laboratory experiment designed to test how competitive behavior is sensitive to price cap and demand level in a uniform price auction. Several features of the electricity markets inspire the experimental design. Two treatments with different price caps are considered and demand is high in certain periods, and low in others. In addition the market is characterized by excess capacity regardless of the demand level and competitive outcome is predicted. Although attempts to collude do take place, these fail to increase market prices in any substantial way. Despite this, inefficiencies do occur as the attempts at colluding imply that marginal costs fail to equalize across firms. This allocative inefficiencies appear to be more severe, both when the demand is high and when the price cap is high.
Keywords
power markets; competitive bidding; electricity markets; firms; fluctuating demands; marginal costs; market prices; price caps; Aggregates; Cost function; Economics; Educational institutions; Electricity; Electricity supply industry; Games; Industrial economics Oligopoly Power generation economics Electricity supply industry deregulation; Microeconomics;
fLanguage
English
Publisher
ieee
Conference_Titel
European Energy Market (EEM), 2012 9th International Conference on the
Conference_Location
Florence
Print_ISBN
978-1-4673-0834-2
Electronic_ISBN
978-1-4673-0832-8
Type
conf
DOI
10.1109/EEM.2012.6254736
Filename
6254736
Link To Document