Incentives and coordination in vertically related energy markets

Authored by Augusto Ruperez Micola, Albert Banal-Estanol, Derek W. Bunn

Date Published: 2008-08

DOI: 10.1016/j.jebo.2006.12.007

Sponsors: Gaz de France

Platforms: No platforms listed

Model Documentation: Other Narrative Mathematical description

Model Code URLs: Model code not found

Abstract

We present an agent-based model of a multi-tier energy market. We show how reward interdependence between strategic business units within a vertically integrated firm can increase its profits in oligopolistic energy markets. The effects are shown to be distinct from those of the raising rivals' costs model. In our case, higher prices relate to the nature of energy markets, which facilitate the emergence of financial netback effects. (c) 2008 Elsevier B.V. All rights reserved.

Tags

Agent-based modelling energy markets reward interdependence