Horizontal subcontracting and investment in idle dispatchable power plants

Jan Bouckaert, Geert Van Moer

Forskningsoutput: TidskriftsbidragArtikelVetenskapligPeer review

1 Citeringar (Scopus)


We analyze horizontal subcontracting and show how idle production facilities can reduce contracting costs by credibly protecting against hold-up. Our analysis contributes to understanding competition between power firms that increasingly use intermittent generation sources. Their unilateral incentives to invest in maintaining underused units, such as dispatchable gas-fired plants, are underrated by plant profitability indicators. From a policy perspective, decentralized strategic investment incentives reduce the possible need for centralized security of supply measures. Our welfare analysis indicates that quantity competition can lead to a lower market-clearing price than price competition.
Referentgranskad vetenskaplig tidskriftInternational Journal of Industrial Organization
Sidor (från-till)307-332
Antal sidor26
StatusPublicerad - 05.2017
MoE-publikationstypA1 Originalartikel i en vetenskaplig tidskrift


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