Competition with forward contracts: a laboratory analysis motivated by electricity market design
| Authors |
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| Publication date |
2008
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| Journal |
Economic Journal
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| Volume | Issue number |
118 | 525
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| Pages (from-to) |
192-214
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| Number of pages |
23
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| Organisations |
-
Faculty of Economics and Business (FEB) - Amsterdam School of Economics Research Institute (ASE-RI)
|
| Abstract |
We use experiments to study the efficiency effects of adding the possibility of forward contracting to a spot market. We focus on the strategic implications of a forward market and consider both quantity and supply function competition. In both cases we compare the effect of adding a contract market to the introduction of an additional competitor. We find that, as theory suggests, for both types of competition the introduction of a forward market significantly lowers prices. The combination of supply function competition with a forward market leads to high efficiency levels.
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| Document type |
Article
|
| Language |
English
|
| Published at |
https://doi.org/10.1111/j.1468-0297.2007.02109.x
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