Vertical Structure and the Risk of Rent Extraction in the Electricity Industry

OPEN ARCHIVE

Union Jack
Dannebrog

Vertical Structure and the Risk of Rent Extraction in the Electricity Industry

Vis flere oplysninger

Titel: Vertical Structure and the Risk of Rent Extraction in the Electricity Industry
Forfatter: Boom, Anette; Buehler, Stefan
Resume: This paper studies how competition and vertical structure jointly determine generating capacities, retail prices, and welfare in the electricity industry. Analyzing a model in which demand is uncertain and retailers must commit to retail prices before they buy electricity in the wholesale market, we show that welfare is highest if competition in generation and retailing is combined with vertical separation. Vertically integrated generators choose excessively high retail prices and capacities to avoid rent extraction in the wholesale market when their retail demand exceeds their capacity. Vertical separation eliminates the risk of rent extraction and yields lower retail prices.
URI: http://hdl.handle.net/10398/9664
Dato: 2018-08-27

Creative Commons License This work is licensed under a Creative Commons License.

Filer Størrelse Format Vis
WP_8_CBS_2018.pdf 642.8Kb PDF Vis/Åbn Working Paper

Dette dokument findes i følgende samling(er)

Vis flere oplysninger