Arbeitspapier

Inflow Uncertainty in Hydropower Markets

In order to analyse the consequences of uncertainty for prices and efficiency in a hydropower system, we apply a two-period model with uncertainty in water inflow. We study three different market structures, perfect competition, monopoly and oligopoly and stress the importance of the shape of the demand function under different distributions of water inflow. The uncertainty element creates possibilities of exercising market power depending on the distribution of uncertainty among producers. The introduction of thermal power into the hydropower market has an impact on the residual demand function, which is important for the hydropower producers' possibilities of exercising market power.

Language
Englisch

Bibliographic citation
Series: Discussion Papers ; No. 520

Classification
Wirtschaft
Market Structure, Pricing, and Design: General
Agriculture: Aggregate Supply and Demand Analysis; Prices
Energy: Demand and Supply; Prices
Market Structure, Firm Strategy, and Market Performance: General
Subject
hydropower
uncertainty
electricity
thermal power
demand functions
monopoly
duopoly

Event
Geistige Schöpfung
(who)
Hansen, Petter Vegard
Event
Veröffentlichung
(who)
Statistics Norway, Research Department
(where)
Oslo
(when)
2007

Handle
Last update
10.03.2025, 11:43 AM CET

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Object type

  • Arbeitspapier

Associated

  • Hansen, Petter Vegard
  • Statistics Norway, Research Department

Time of origin

  • 2007

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