Vertical Structure and the Risk of Rent Extraction

Anette Boom, Stefan Buehler

Publikation: KonferencebidragPaperForskningpeer review

Abstrakt

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.
OriginalsprogEngelsk
Publikationsdato2018
Antal sider49
StatusUdgivet - 2018
BegivenhedThe 45th Annual Conference of the European Association for Research in Industrial Economics. EARIE 2018 - Athens College, Athens, Grækenland
Varighed: 31 aug. 20182 sep. 2018
Konferencens nummer: 45
http://www.earie2018.org/

Konference

KonferenceThe 45th Annual Conference of the European Association for Research in Industrial Economics. EARIE 2018
Nummer45
LokationAthens College
LandGrækenland
ByAthens
Periode31/08/201802/09/2018
Internetadresse

Emneord

  • Electricity
  • Generating capacities
  • Vertical integration
  • Monopoly
  • Competition

Citationsformater

Boom, A., & Buehler, S. (2018). Vertical Structure and the Risk of Rent Extraction. Paper præsenteret på The 45th Annual Conference of the European Association for Research in Industrial Economics. EARIE 2018, Athens, Grækenland. https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=EARIE45&paper_id=317