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Dr. ANDREW ECKERT, Professor, Department of Economics, University of Alberta
is speaking on:
"Analyzing the Impact of Electricity Market Structure Changes and Mergers: The Importance of Forward Commitments:
at 1:00 pm on Friday March 31st in E-690 (U-Hall)
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Drs. Andrew Eckert & David Brown investigate how the effects of market structure changes and mergers in restructured electricity markets depend on the level of forward contracting. Following Bushnell, Mansur, and Saravia (2008), they develop a Cournot model of Alberta's wholesale electricity market that incorporates firms' forward positions. Using data from 2013-2014, they calibrate the monthly forward positions of the five largest firms in the market, and simulate the effects of different market structure changes, including variations of a hypothetical merger with asset divestitures. They examine the sensitivity of the simulated effects of mergers and other market structure changes to assumptions regarding firms' forward commitments. We demonstrate that the wholesale market impacts of mergers and market structure changes depend critically on firms' forward commitments in the post market structure change equilibrium. Their paper demonstrates the importance of establishing a clear understanding of the size and nature of forward commitments in forecasting the effects of mergers and other market structure changes in wholesale electricity markets.
Contact:
Merle Christie | christie@uleth.ca | (403) 329-2518