2010-04-11 papers

on Industrial Organization

Issue of 2010‒04‒11
one paper chosen by

Strategic Behaviour, Resource Valuation and Competition in Electricty Markets By Miguel A. Espinosa; Alvaro J. Riascos Villegas

Strategic Behaviour, Resource Valuation and Competition in Electricty Markets

By:	Miguel A. Espinosa; Alvaro J. Riascos Villegas
Abstract:	By means of a suitable Bayesian game we study spot electricity markets from a structural point of view. We address the problem of individual and aggregate eficciency and we show how to value water from market observables. We compare the former to engineering methods and apply our methodology to Colombian spot electricity market. Our results show that big gas and small hydro plants overbid, resources are undervalued by engineering costs and aggregate costs would have been considerably smaller if agents had played optimally. Revealed costs show a substantial gain in eficciency in the Vickrey auction compared to the actual uniform auction.
Date:	2010–03–07
URL:	http://d.repec.org/n?u=RePEc:col:000089:006856&r=ind

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