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Incentives and co-ordination in vertically related energy markets

Journal

Journal of Economic Behavior and Organization

Subject

Management Science and Operations

Publishing details

Journal of Economic Behavior and Organization 2008 Vol 67:2 p 381-393

Authors / Editors

Bunn D W;Micola R

Biographies

Derek Bunn

Publication Year

2008

Abstract

We present an agent-based model of a multi-tier energy market. We show how reward interdependence between strategic business units within a vertically integrated firm can increase its profits in oligopolistic energy markets. The effects are shown to be distinct from those of the raising rivals’ costs model. In our case, higher prices relate to the nature of energy markets, which facilitate the emergence of financial netback effects.

Keywords

Agent-based modelling; Energy markets; Reward interdependence

Available on ECCH

No


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