Abstract
In this paper, a dynamic Cournot model is used to evaluate the likely impacts of possible mergers in the Colombian wholesale market for electricity. Our simulations showed that a substantial degree of energy withholding resulted in spot prices that on average were 24% above pre-merger levels. However, when high levels of ex-ante contracting were incorporated into the model, post-merger prices did not increase substantially or even drop below pre-merger prices. A short discussion on how these results were used for policy making at the regulatory commission is presented.
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