Market Efficiency, Competition, and Communication: Experimental results
http://www.erasmusenergy.com/articles/158/1/Market-Efficiency-Competition-and-Communication-Experimental-results/Page1.html
Duane Chapman
Duane Chapman, Professor of Environmental Economics, has worked extensively in Russia and Southern Africa, and on energy policy in the U.S. His current work with graduate students is in the areas of the economics of development and environment, climate change, forestry, and world oil markets. His textbook, Environmental Economics: Theory, Application, and Policy, has just been published by Addison Wesley Longman HarperCollins. By Duane Chapman
Published on 01/28/2008
Keywords: Electricity, restructures markets, competition, market power, antitrust
Published in:
Publication year: 2002
Co-author 1: C.A. Vossler
Co-author 2: T.D. Mount
Co-author 3: V. Barboni
Co-author 4: R.J. Thomas
Co-author 5: R.D. Zimmerman
Economic theory gives no clear indication of the minimum number of producers necessary for a market to define competitive price-quantity equilibria which approximate price equal to marginal cost. Previous work and FERC Guidelines generally suggest that 6 to 10 generators may be workably competitive. Our experiments with PowerWeb suggest that a higher number of suppliers may be necessary to approximate competitive market solutions, this in the absence of any communication among producers. As communications rules are altered to parallel differing types of antitrust enforcement, market results with 24 participants approach pure monopoly values.
Published in:
Publication year: 2002
Co-author 1: C.A. Vossler
Co-author 2: T.D. Mount
Co-author 3: V. Barboni
Co-author 4: R.J. Thomas
Co-author 5: R.D. Zimmerman
Economic theory gives no clear indication of the minimum number of producers necessary for a market to define competitive price-quantity equilibria which approximate price equal to marginal cost. Previous work and FERC Guidelines generally suggest that 6 to 10 generators may be workably competitive. Our experiments with PowerWeb suggest that a higher number of suppliers may be necessary to approximate competitive market solutions, this in the absence of any communication among producers. As communications rules are altered to parallel differing types of antitrust enforcement, market results with 24 participants approach pure monopoly values.
Market Efficiency, Competition, and Communication: Experimental results
Economic theory gives no clear indication of the minimum number of producers necessary for a market to define competitive price-quantity equilibria which approximate price equal to marginal cost. Previous work and FERC Guidelines generally suggest that 6 to 10 generators may be workably competitive. Our experiments with PowerWeb suggest that a higher number of suppliers may be necessary to approximate competitive market solutions, this in the absence of any communication among producers. As communications rules are altered to parallel differing types of antitrust enforcement, market results with 24 participants approach pure monopoly values.