Abstract
In this paper, we develop a two-period model where we analyze and compare a hydro/thermal electrical system under different industrial organization: monopoly, Cournot competition and collusion; under storage constraint, water availability constraint and thermal turbine capacity constraint. First, we prove that the technological complementarity has an important role in satisfying electricity demand in the different industrial organizations. Second, we show by the analytical resolution, that intertemporal private monopoly water transfer from off-peak season to peak season is not as high as the same transfer under a public monopoly and therefore this increases the market price. Under Cournot competition, an increase in the peak season demand implies a water transfer strategy from off-peak to peak season. The results of collusion show that the electricity price is less dependent on the hydropower capacity. Keywords : Electricity market; Monopoly; Competition; Collusion; Hydro; Thermal. JEL Classifications : L20; Q40; Q25. DOI: https://doi.org/10.32479/ijeep.8775
Highlights
The market structure of the electricity sector has been characterized by natural monopolies
By the analytical resolution, we show that intertemporal private monopoly water transfer from off-peak season to peak season is not as high as the same transfer under a public monopoly and this increases the market price
We show that the technological complementarity has an important role in satisfying the electricity demand in the different industrial organizations
Summary
The market structure of the electricity sector has been characterized by natural monopolies. We use Ambec and Doucet (2003) framework to develop a two-period model where we analyze and compare a hydro/thermal electrical system under different industrial organizations: monopoly, Cournot competition and collusion; under storage constraint, water availability constraint and thermal turbine capacity constraint. We compare Cournot competition and collusion equilibriums and we show how the strategical water storage is used, in a collusive agreement, to increase the market price.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
