Hydroeletric Generators Competing in Cascades

Resumo

Hydroelectric generation is the main source of energy production in manycountries. When firms operate in the same river, or in cascades, the outputof an upstream firm is the input of its downstream rival. We build a dynamicstochastic duopoly model of competition in cascades and show that thedecentralized market is inefficient when rain is frequent. However, at the critical times when rain is infrequent the market allocation isefficient. In an extension of our benchmark model, we show that regulatory intervention might be necessary if peak prices are sufficiently higher than off-peak prices. In such cases, upstream firms delay production in off-peak times, limiting their rivaldownstream generators' production in peak times.

Ficha do documento

Tipo

Artigo científico

Ano

2020

Instituição

EGV EPGE

Fonte

Revista Brasileira de Economia

Idioma

Inglês

Acesso

Não informado

Identificador

oai:ojs.periodicos.fgv.br:article/76860

Palavras-chave

electricity marketsdynamic gameshydroelectric generation