Market efficiency, competition, and communication in electric power markets: experimental results [An article from: Ecological Economics]

This digital document is a journal article from Ecological Economics, published by Elsevier in 2004. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
Economic theory gives no clear indication of the minimum number of producers necessary for a market to define competitive price-quantity equilibria, which approximate price equal to marginal cost. Previous work and Federal Energy Regulatory Commission (FERC) guidelines generally suggest that 6-10 suppliers may be workably competitive. Our experiments with PowerWeb suggest that a higher number of suppliers may be necessary to approximate competitive market solutions, this in the absence of any communication among producers. As communications rules are altered to parallel differing types of antitrust enforcement, market results with 24 participants approach pure monopoly values.