This paper models supply prices coordination in electricity markets in which a group of rms is vertically integrated. We analyze vertical integration by removing the assumption of perfect inter- rms information within a group. Then, we discuss the implication to price decisions of the presence of asymmetric (cost) information between generators and retailers within a simple P-A framework. This permits us to interpret the presence of a pro t gap with respect to the group's maximum pro t, as the result of a costly coordination activity between generator and retailer. The empirical investigation is conducted using Italian electricity auction data. Results show that bid prices posted by generators are signi cantly a ected (i.e. moderated) by variables incorporating vertical integration into the econometric model. We discuss the magnitude and significance of these findings.

Bosco, B., VISCONTI PARISIO, L., Pelagatti, M. (2013). Optimal pricing behavior of vertically integrated utilities: Theory and evidence from the Italian electricity wholesale market. In 2013 10th International Conference on the European Energy Market (EEM) (pp.1-7) [10.1109/EEM.2013.6607348].

Optimal pricing behavior of vertically integrated utilities: Theory and evidence from the Italian electricity wholesale market

BOSCO, BRUNO PAOLO;VISCONTI PARISIO, LUCIA;PELAGATTI, MATTEO MARIA
2013

Abstract

This paper models supply prices coordination in electricity markets in which a group of rms is vertically integrated. We analyze vertical integration by removing the assumption of perfect inter- rms information within a group. Then, we discuss the implication to price decisions of the presence of asymmetric (cost) information between generators and retailers within a simple P-A framework. This permits us to interpret the presence of a pro t gap with respect to the group's maximum pro t, as the result of a costly coordination activity between generator and retailer. The empirical investigation is conducted using Italian electricity auction data. Results show that bid prices posted by generators are signi cantly a ected (i.e. moderated) by variables incorporating vertical integration into the econometric model. We discuss the magnitude and significance of these findings.
paper
Regulation, vertical integration, electricity markets, strategic delegation
English
10th International Conference on the European Electricity Market (EEM13)
2013
2013 10th International Conference on the European Energy Market (EEM)
978-1-4799-2008-2
2013
1
7
http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=6607348&isnumber=6607268
none
Bosco, B., VISCONTI PARISIO, L., Pelagatti, M. (2013). Optimal pricing behavior of vertically integrated utilities: Theory and evidence from the Italian electricity wholesale market. In 2013 10th International Conference on the European Energy Market (EEM) (pp.1-7) [10.1109/EEM.2013.6607348].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/49785
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