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The More Cooperation, The More Competition? A Cournot Analysis of the Benefits of Electric Market Coupling

Benjamin F. Hobbs, Fieke A.M. Rijkers, Maroeska G. Boots

Year: 2005
Volume: Volume 26
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No4-5
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Abstract:
If barriers between two power markets are eliminated, what might happen to competition and prices? And who benefits? In the case of the Belgian and Dutch markets, market coupling would permit more efficient use of transmission by improving access to the Belgian market, by counting only net flows against interface limits, and by eliminating mismatches in timing of interface auctions and energy spot markets. We estimate the benefits associated with the first two of these impacts using a transmission-constrained Cournot model. Social surplus improvements on the order of 108 �/year are projected, unless market coupling encourages the largest producer in the region to switch from price-taking in Belgium to a Cournot strategy due to a perceived diminished threat of regulatory intervention. Whether Dutch consumers would benefit also depends on that company�s behavior. The results illustrate how large-scale oligopoly models can be used to assess changes in market designs.



Efficiency vs. Stability in Climate Coalitions: A Conceptual and Computational Appraisal

Thierry Bréchet, François Gerard and Henry Tulkens

Year: 2011
Volume: Volume 32
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol32-No1-3
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Abstract:
This paper evaluates with numerical computations the respective merits of two competing notions of coalition stability in the standard global public goods model of climate change. To this effect it uses the CWS integrated assessment model. After a reminder of the two game theoretical stability notions involved--core-stability and internal-external stability--and of the CWS model, the former property is shown to hold for the grand coalition if resource transfers of a specific form between countries are introduced. The latter property appears to hold neither for the grand coalition nor for most large coalitions whereas it is verified for most small coalitions in a weak sense that involves transfers. Finally, coalitions, stable in either sense, that perform best in terms of carbon concentration and global welfare are always heterogeneous ones. Therefore, if coalitional stability is taken as an objective, promoting small or homogeneous coalitions is not to be recommended.





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