A Look Upstream: Electricity Market Restructuring, Risk, Procurement Contracts and Efficiency

Di Maria, Corrado, Lange, Ian A. and Lazarova, Emiliya (2014) A Look Upstream: Electricity Market Restructuring, Risk, Procurement Contracts and Efficiency.

[img]
Preview
PDF (cesifo1_wp5124) - Published Version
Download (1MB) | Preview

Abstract

This paper analyzes theoretically and empirically how upstream markets are affected by deregulation downstream. Deregulation tends to increase the level of uncertainty in the upstream market. Our theoretical analysis predicts that deregulated firms respond to this increase in uncertainty by writing more rigid contracts with their suppliers. Using the restructuring of the electricity market in the U.S. as our case study, we find support for our theoretical predictions. Furthermore, we investigate the impact this change in procurement contracts has on efficiency. Focusing on coal mines, we find that those selling coal to plants in restructured markets are significantly more productive than their counterparts working with regulated plants. On the other hand, we also find that transaction costs may have increased as a consequence of deregulation.

Item Type: Article
Uncontrolled Keywords: energy policy,electricity market restructuring,deregulation,procurement contracts,risk,efficiency
Faculty \ School: Faculty of Social Sciences > School of Economics
Related URLs:
Depositing User: Pure Connector
Date Deposited: 31 Oct 2016 17:00
Last Modified: 22 Jul 2020 02:53
URI: https://ueaeprints.uea.ac.uk/id/eprint/61189
DOI:

Actions (login required)

View Item View Item