Competition in cascades

dc.contributorEscolas::EESP
dc.creatorMoita, Rodrigo Menon Simões
dc.creatorMonte, Daniel
dc.date.accessioned2017-08-09T13:32:11Z
dc.date.accessioned2022-11-03T20:15:03Z
dc.date.available2017-08-09T13:32:11Z
dc.date.available2022-11-03T20:15:03Z
dc.date.created2017-08-09T13:32:11Z
dc.date.issued2017
dc.identifierTD 456
dc.identifierhttp://hdl.handle.net/10438/18627
dc.identifier.urihttps://repositorioslatinoamericanos.uchile.cl/handle/2250/5034589
dc.description.abstractHydroelectric generation is the main source of energy production in many countries. When firms operate in the same river, or in cascades, the output of an upstream firm is the input of its downstream rival. We build a dynamic stochastic duopoly model of competition in cascades and show that the decentralized market is efficient at the critical times when rain is infrequent, but inefficient when rain is more frequent. Market power is an issue when peak prices are sufficiently higher than off-peak prices: Upstream firms delay production in off-peak times, limiting their rival downstream generators' production in peak times.
dc.languageeng
dc.relationEESP - Textos para Discussão;TD 456
dc.subjectElectricity markets
dc.subjectDynamic games
dc.subjectHydroelectric generation
dc.titleCompetition in cascades
dc.typeWorking Paper


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