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

Show simple item record

dc.contributor.author Boom, Anette
dc.contributor.author Buehler, Stefan
dc.date.accessioned 2018-08-27T14:19:11Z
dc.date.available 2018-08-27T14:19:11Z
dc.date.issued 2018-08-27
dc.identifier.uri http://hdl.handle.net/10398/9664
dc.description.abstract 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. en_US
dc.format.extent 49 en_US
dc.language eng en_US
dc.relation.ispartofseries Working Paper;8-2018
dc.subject.other Electricity en_US
dc.subject.other Generating capacities en_US
dc.subject.other Vertical integration en_US
dc.subject.other Monopoly en_US
dc.subject.other Competition en_US
dc.title Vertical Structure and the Risk of Rent Extraction in the Electricity Industry en_US
dc.type wp en_US
dc.accessionstatus modt18aug27 soma en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Økonomisk Institut en_US
dc.contributor.departmentshort ECON en_US
dc.contributor.departmentuk Department of Economics en_US
dc.contributor.departmentukshort ECON en_US
dc.publisher.city Frederiksberg en_US
dc.publisher.year 2018 en_US


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

Files Size Format View
WP_8_CBS_2018.pdf 642.8Kb PDF View/Open Working Paper

This item appears in the following Collection(s)

Show simple item record