Strategic Action in the Liberalised German Electricity Market

Nowadays, a process can be observed in Germany where electricity producing and trading firms react to the electricity market liberalisation by merging market shares, since the year 2000, which reduces the number of suppliers and influences production and consumer prices. This paper discusses whether the liberalisation process will have positive or negative impacts on the environmental situation and whether this process together with a phase out of nuclear power can guarantee the intended improvement of environmental conditions without governmental regulation in Germany. This is done by modelling different strategic options of energy suppliers and their impacts on the economic and environmental situation in the liberalised German electricity market by a computational game theoretic model. Calculations with this model show that when German firms act strategically (e.g. a change in action of one firm affects the electricity price and, hence, the payoffs of other firms), the environment is better off at the cost of higher electricity prices. This result is robust to perturbations as shows by performing a sensitivity analysis.Electricity market liberalisation, game theoretic model, environmental effectiveness

Market power appearance through game theoretic maintenance scheduling of distributed generations

The oligopoly structure of the market and the network constraints may produce results far from the perfect competition. Maintenance decisions in an oligopolistic electricity market have a strategic function, because GENCOs usually have impacts on market prices through capacity outages. This paper describes generation maintenance planning in an oligopolistic environment as a strategic decision. In this paper a game theoretic framework is modeled to analyze strategic behaviors of GENCOs. Each GENCO tries to maximize its payoff by strategically making decisions, taking into account its rival GENCOs' decisions. Some GENCOs own DG units, such as wind, diesel, biomass and fuel cell plants. If different GENCOs find out they have the conditions of exerting market power exact in maintenance periods; they will share their data and they will cause some area monopolies. Cournot-Nash equilibrium is used for decision making on maintenance problem in Oligopolistic electricity market. The Cournot-Nash problem is modeled as a mixed integer nonlinear programming optimization problem. The analytic framework presented in this paper enables joint assessment of maintenance and generation strategies. © 2011 Praise Worthy Prize S.r.l. -All rights reserved

The Opening of the European Electricity Market and Environmental Policy: Does the Degree of Competition Matter?

This paper studies the relevance of strategic trade effects in the environmental policy for the European electricity sector. The production, investment and trade of electricity are modelled for four European countries. Three market regimes are distinguished: perfect competition, price regulation and Cournot competition. The model is used to examine the effect of the degree of competition on the state of the environment and to study the strategic trade effects of unilateral environmental policies.Electricity, Trade and the Environment

Liberalisation in a world of second best: evidence on European network industries

This article reports mixed results about the impacts of liberalisation in European network industries. Telecommunications prices have fallen and converged across EU-15, but electricity and gas prices have either increased or diverged. Productivity has increased, but mainly as a result of falling employment in absolute and relative terms. Liberalised industries are still characterised by high levels of market concentration and low levels of transparency and market integration. These findings are in line with the predictions of the theory of second best and suggest that the case for liberalisation of network industries has been oversold.Liberalisation, network industries, second-best, public policy, European Union

Liberalisation in a world of second best: evidence on European network industries

This article reports mixed results about the impacts of liberalisation in European network industries. Telecommunications prices have fallen and converged across EU-15, but electricity and gas prices have either increased or diverged. Productivity has increased, but mainly as a result of falling employment in absolute and relative terms. Liberalised industries are still characterised by high levels of market concentration and low levels of transparency and market integration. These findings are in line with the predictions of the theory of second best and suggest that the case for liberalisation of network industries has been oversold

Oligopolistic markets: transformation of the essence and forms of competition

Relevance of the research. In the past 20 years the markets in the developed economies demonstrate a trend to concentrate economic agents and their consolidation to optimize economic processes, maximize efficient business performance, and pursue robust communication policy. The markets of raw and ready products, international and interregional services and works are shifting towards oligopolization. Therefore, it is important to analyze and characterize the ongoing significant changes in functioning of oligopolistic markets triggered by globalization, hyper-competition, new technological paradigms, development of innovations and consumer behavior trends in the modern economy. The main aim of the research is to outline the fundamental factors of influence upon changes in modern market performance, intensified competition under globalization and transition to the postindustrial economy summing up the studies in different research areas (strategic management, marketing, the theory of industrial organization, consumer behavior, innovations, etc.); to determine to what extent the oligopoliesstimulating factors encourage intensive competition between market participants and resist cartelization of oligopolistic markets; to describe the main characteristics of the new meaning of the competition model for innovative oligopolistic markets in comparison with the classical model of oligopoly; to identify a trend towards systemwide changes of the form and nature of competition on oligopolistic markets that requires a game-changing review of approaches to the principles of antimonopoly regulation at the modern stage; to systematize and highlight the new substantial content of the competition model on oligopolistic markets and the factors influencing intensified competition on oligopolistic markets. Research methods: systemic analysis, comparative and normative legal analysis. Results. The features of competitiveness within the frame of two models - classical oligopoly and oligopoly changing under the influence of new economic trends - occur in multilevel, poly-structured, inter-sectoral competition of business-systems formed by the market leaders. Cross-competition between participants of different systems creates the conditions for flexible market conduct. Conclusions. System-wide changes in the form and nature of competition on the oligopolistic markets, including the innovative ones, initiate the development of new institutional mechanisms and approaches to substante the principles and methods of antimonopoly regulation at the present stage

Evidence on Imperfect Competition and Strategic Trade Theory

Strategic trade theory shows that government intervention in markets with small numbers of traders can boost the welfare of a country relative to free trade. This survey critically assesses the empirical evidence regarding this possibility. One finding is that while many international food and agricultural markets are characterized by oligopoly, price-cost markups tend to be small, and the potential gains from intervention are modest at best. In turn, existing government interventions such as agricultural export subsidies are generally not optimal in a strategic trade sense. The evidence suggests that oligopoly by itself is not a sufficient rationale for deviating from free trade in international markets.

Equilibrium Predictions in Wholesale Electricity Markets

We review supply function equilibrium models and their predictions on market outcomes in the wholesale electricity auctions. We discuss how observable market characteristics such as capacity constraints, number of power suppliers, load distribution and auction format affect the behavior of suppliers and performance of the market. We specifically focus on the possible market power exerted by pivotal suppliers and the comparison between discriminatory and uniform-price auctions. We also describe capacity investment behavior of electricity producers in the restructured industry.Electricity markets; Supply function equilibrium; Markov perfect equilibrium; electricity auctions; pivotal suppliers; capacity investment.

Optimization of Number of Operators and Allocation of New Lines in an Oligopolistic Transit Market

This paper proposes a novel model for determining the optimal number of transit operators and the allocation of new lines in an oligopolistic transit market. The proposed model consists of three interrelated sub-models that are associated with three types of players; namely, transit authority, transit operators, and transit passengers. In practice, the operating cost per unit of transit line of each operator is decreasing in the number of lines that it operates. These effects which are referred to as the scale economies of transit operations are explicitly incorporated in the proposed model. On the basis of a logit-type transit passenger travel choice sub-model with elastic demand, the fares and frequencies of transit services are determined by an oligopolistic competitive equilibrium model (i. e. transit operator sub-model). The transit authority sub-model for optimization of the number of operators and the allocation of new lines is expressed as a 0-1 integer programming problem. It can be solved by an implicit enumeration heuristic solution algorithm. Numerical results show that both the scale economies and the market demand level have significant impacts on the optimal number of operators and the allocation schemes of new lines. Ignoring the effects of scale economies on transit operations may lead transit authorities to make biased decisions. © 2010 Springer Science+Business Media, LLC.postprin

Is retailing really unique? Insights into retail internationalization using business theories

Internationalization is one of the most important trends in retailing today. This process is not new, however has accelerated in the last two decades. It was less than 30 years ago that almost all of the world’s retail firms were pure national firms with a negligible share in foreign markets. That scenario has changed dramatically. Taking a look at the top 200 global retailers, almost all players except those in the US operate in numerous countries, having established a noteworthy business capacity in foreign markets. It is observed that retailers often export their business model in new markets. Therefore they are regarded as driving forces of structural change in the agri food business. The understanding of retail internationalization is essential to the understanding of the changes in the agri food business. Investigating retail internationalization many scholars builds on the theories of the wider business internationalization literature. Other authors state that retailing is unique, therefore the business theories can not be applied. By reviewing the literature we try to overcome this tension and discuss how business internationalization theories can help to understand retail internationalization.internationalization, retail internationalization, business internationalization theories, Agricultural and Food Policy,