Replication data for: Vertical Arrangements, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets
Principal Investigator(s): View help for Principal Investigator(s) James B. Bushnell; Erin T. Mansur; Celeste Saravia
Version: View help for Version V1
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Project Citation:
Bushnell, James B., Mansur, Erin T., and Saravia, Celeste. Replication data for: Vertical Arrangements, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets. Nashville, TN: American Economic Association [publisher], 2008. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113228V1
Project Description
Summary:
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This paper examines vertical arrangements in electricity markets. Vertically
integrated wholesalers, or those with long-term contracts, have less incentive to
raise wholesale prices when retail prices are determined beforehand. For three
restructured markets, we simulate prices that define bounds on static oligopoly
equilibria. Our findings suggest that vertical arrangements dramatically affect
estimated market outcomes. Had regulators impeded vertical arrangements (as
in California), our simulations imply vastly higher prices than observed and
production inefficiencies costing over 45 percent of those production costs with
vertical arrangements. We conclude that horizontal market structure accurately
predicts market performance only when accounting for vertical structure. (JEL
L11, L13, L94)
Scope of Project
JEL Classification:
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L11 Production, Pricing, and Market Structure; Size Distribution of Firms
L13 Oligopoly and Other Imperfect Markets
L94 Electric Utilities
L11 Production, Pricing, and Market Structure; Size Distribution of Firms
L13 Oligopoly and Other Imperfect Markets
L94 Electric Utilities
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