• 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