Strategic pricing when electricity is storable Academic Article

abstract

• In this paper, we develop a simplified oligopoly model where hydro generators engage in dynamic Bertrand competition. Each player uses a Markov strategy based on the state of water reservoirs at the beginning of each period. The replenishing of water reservoirs, which affects generators' productive capacity, is governed by a stochastic process. Also, a price cap, i.e. a maximum bid allowed, is imposed on the market. We develop valuable insights for regulatory policy in predominantly hydro based electricity markets, including the effects of price caps, the efficiency of dispatch under strategic behavior and the likelihood of collusion.

authors

• Garcia, Alfredo

published proceedings

• JOURNAL OF REGULATORY ECONOMICS

author list (cited authors)

• Garcia, A., Reitzes, J. D., & Stacchetti, E.

citation count

• 28

complete list of authors

• Garcia, A||Reitzes, JD||Stacchetti, E

publication date

• November 2001

publisher

• Springer Nature  Publisher

published in

• Journal of Regulatory Economics  Journal

keywords

• 38 Economics
• 3801 Applied Economics
• 3803 Economic Theory

Digital Object Identifier (DOI)

• 10.1023/A:1011151409081

start page

• 223

end page

• 247

volume

• 20

issue

• 3

URL

• http://dx.doi.org/10.1023/a:1011151409081

user-defined tag

• 7 Affordable and Clean Energy