Strategic Reneging and Market Power in Sequential Markets

• 成果类型: Article
• 署名作者: Benatia, David; de Villemeur, etienne Billette
• 署名单位: Universite de Montreal; HEC Montreal; Universite de Lille; Centre National de la Recherche Scientifique (CNRS); CNRS - Institute for Humanities & Social Sciences (INSHS)
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12488
• 发表日期: 2025
• 页码: 3-34
• 关键词: electricity markets; multiunit auctions; COMPETITION; collusion

摘要

This article investigates the incentives for firms with market power to manipulate markets by strategically reneging on forward commitments. We first study the behavior of a dominant firm in a two-period model with demand uncertainty. We then use the model's predictions and a machine learning approach to investigate multiple occurrences of reneging on long-term commitments in Alberta's electricity market in 2010-2011. We find that a supplier significantly increased its revenues by strategically reneging on its capacity availability obligations, causing Alberta's annual electricity procurement costs to increase by as much as $600 million (+17%).