Vertical arrangements, market structure, and competition an analysis of restructured u.s. electricity markets
By: James B. Bushnell, Erin T. Mansur, Celeste Saravia
Contributors: Mansur, Erin; Saravia, Celeste; National Bureau of Economic Research
Series: NBER working paper series -- working paper 13507; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 13507.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] /
Description: "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"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 11/1/2007.

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