Uncertain regulatory timing and market dynamics

Wilson, Nathan E.

doi:10.1016/j.ijindorg.2011.07.001

Cited by 3 publications

(2 citation statements)

References 52 publications

(72 reference statements)

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“…This explains the popularity of the open-loop information structure in the literature in general. In the generation-expansion-planning literature, Bushnell and Ishii (2007) is one of few papers to investigate a Markov perfect equilibrium (MPE) in which firms make lumpy investment decisions (see also Cullen (2010), Wilson (2010)). 14 In order to obtain a unique equilibrium, Bushnell and Ishii assume that investment decisions are sequential (which does not fit our context).…”

Section: Letmentioning

confidence: 99%

“…However, determining open-loop equilibrium strategies is much easier than computing their closed-loop or feedback counter-14. Note that Cullen (2010) and Wilson (2010) are adapting the MPE framework proposed by Ericson & Pakes (1995) and extended in recent work by Besanko and Dorazelski (2004) and Besanko et al (2010) to the restructured electricity markets. As in Bushnell and Ishii (2007), discrete investments are considered.…”

Section: Letmentioning

confidence: 99%

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A Dynamic Oligopolistic Electricity Market with Interdependent Market Segments

Pineau¹,

Rasata²,

Zaccour³

2011

The Energy Journal

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We propose a deterministic, discrete-time, finite-horizon oligopoly model to investigate investment and production equilibrium strategies, in a setting where demand evolves over time and the two market-segment loads (peak-and baseload) are interdependent. The players (generators) compete a `la Cournot, openloop Nash equilibria are computed and numerical results are discussed. The model is calibrated with data from Ontario, Canada. We assess the impact on equilibrium strategies of a generation sector with more market power than what is actually the case. We also find a slight difference in the investment sequence when interdependent demand segments are considered. Finally, we analyze the impact of increasing demand elasticities over time, and varying the financial values of the production capacities that remain at the end of the planning horizon. We believe that such a tool is valuable for professionals and scholars interested in the dynamics of production capacity mix (portfolio of technologies) in the electricity sector. It is also of paramount importance for public decision makers who have to simultaneously deal with environmental issues and with price control, both of which are politically sensitive.

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Section: Letmentioning

confidence: 99%