Chloé Le Coq
Stockholm School of Economics
Department of economics
Box 6501
SE - 113 83 Stockholm
SWEDEN
Phone: + 46 - 8 - 736 92 00
Fax: + 46 - 8 - 31 32 07
Email: Chloe.LeCoq@hhs.se
· Strategic use of available capacity in the electricity spot market
Abstract: The literature on deregulated electricity markets generally assumes available capacities to be given. In contrast, this paper studies a model where firms precommit to capacity levels before competing in a uniform price auction. The analysis sheds light on recent empirical findings that firms use their available capacity to obtain high market prices. There exist two equilibria where at least one firm withholds its available capacity to induce the maximum price. Moreover, in one equilibrium, the inefficient firm obtains a relatively large market share
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· Do Forward Markets Enhance Competition? Experimental Evidence
Abstract: Allaz and Vila (1993) show that oligopolists have a strategic motive to sell forward. In their model the possibility of forward trading increases competitiveness between firms, raising consumer surplus and welfare. In this study we examine this prediction in a controlled laboratory environment. We investigate how and to what extent the market institution and the number of firms affect competition, in theory and in our experimental markets. Our findings support the main comparative-static predictions of the model but also suggest that the competition-enhancing effect of a forward market is weaker than predicted. In contrast, entry has a stronger competition-enhancing effect.
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· Do Opponents' Experience Matter? Experimental Evidence from a Quantity Precommitment Game
Abstract:
This paper investigates why subjects in laboratory experiments on quantity
precommitment games consistently choose capacities above the Cournot level - the
subgame-perfect equilibrium. We argue that this puzzling regularity may be
attributed to players' perceptions of their opponents' skill or level of
rationality. In our experimental design, we use the level of experience (the
number of periods played) as a proxy for the level of rationality and match
subjects with different levels of experience. We first find evidence of capacity
choices decreasing, and prices increasing, with the opponent's experience.
Futhermore, we investigate the observed behavioural patterns by using the
agent-form quantal response equilibrium model by McKelvey and Palfrey (1998). In
particular, this framework takes into account any interaction between a player's
own experience and that of his opponent. We show how the predictions of this
theoretical framework fit well with the experimental data.
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· Long-Term Supply Contracts and Collusion in the Electricity Markets
Abstract: It has been argued that having a contract market before the spot market enhances competition (Allaz and Vila, 1993). Taking into account the repeated nature of electricity markets, we check the robustness of the argument that the access to contract markets reduces the market power of generators. In particular, we investigate the sensitivity of this result with respect to the finite horizon assumption. This paper proposes a model of the electricity market where firms sign long-term supply contracts with their retailers. Subsequently, the firms repeatedly interact on the spot market. It is shown that contract markets help sustain collusion on the spot market.
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TEACHING
PROJECTS
Electricity Market Liberalisation in Europe (EMELIE)- European project
This project focuses on the wholesale European electricity market, using a game-theoretic computable model, the EMELIE model. This model integrates different assumptions about market structures – perfect competition, Cournot and Stackelberg oligopoly – to compute the market outcome in terms of prices, quantities and technology use. The model runs use data from the base year 2000 for eight European countries: Belgium, Denmark, Finland, France, Germany, the Netherlands, Norway and Sweden.
http://www.uni-oldenburg.de/speed/english/projects/emelie.htm
Sustainable Energy Specific Support Assessment (SESSA)- European project n
This project consists in a energy regulation forum addressing the following issues: (i) refining market design, especially for power and transmission, as for renewable; (ii) addressing market power and industry restructuring for the European consumers benefits; (iii) ensuring success of the EU electricity enlargement to New Member States; (iv) harmonizing effective regulation, in particular concerning demand side management, incentives for renewable energies and cross-border exchanges; (v) investing for sustainability, especially in terms of RTD programs, energy efficiency, distributed generation and security supply. For all those issues, national experiences are discussed and best practices are identified.
Efficient short term power markets
This project builds on the results from the initial study of the short term
power market performed during the programmes first phase. The purpose is to
study the outcome of different ways to arrange the short term trade of power,
including the so called “balancing market”. “Experimental economy”- methods
will be used in this project to simulate how the parties on the market would
act according to different boundaries and regulations settings.