A Look Upstream: Market Restructuring, Risk, Procurement Contracts and Efficiency
Di Maria, Corrado, Lange, Ian and Lazarova, Emiliya (2018) A Look Upstream: Market Restructuring, Risk, Procurement Contracts and Efficiency. International Journal of Industrial Organization, 57. pp. 35-83. ISSN 0167-7187
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Abstract
We study how market deregulation affects the upstream industry both theoretically and empirically. Our theory predicts that firms respond to increases in uncertainty due to deregulation by writing more rigid contracts with their suppliers. Using the restructuring of the U.S. electricity market as our case study, we find support for our theoretical predictions. Our findings imply a greater emphasis on efficiency at coal mines contracting with restructured plants. The evidence suggests a 17% improvement in productivity at these mines, relative to those contracting with regulated plants. We find, on the other hand, that transaction costs may have increased. We conclude that deregulation has significant impacts upstream from deregulated markets.
Item Type: | Article |
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Uncontrolled Keywords: | coal use,energy,electricity market restructuring,procurement contracts,efficiency,transaction costs |
Faculty \ School: | Faculty of Social Sciences > School of Economics Faculty of Science > Tyndall Centre for Climatic Change |
Depositing User: | Pure Connector |
Date Deposited: | 08 Jan 2018 12:01 |
Last Modified: | 26 Feb 2021 00:50 |
URI: | https://ueaeprints.uea.ac.uk/id/eprint/65883 |
DOI: | 10.1016/j.ijindorg.2017.12.007 |
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