Hendrik (Hank) Bessembinder
holds the A. Blaine Huntsman Presidential Chair in Finance at the David Eccles Business School of the University of Utah. He completed his Ph.D. in Finance at the University of Washington in 1986, and previously held faculty positions at the Goizueta Business School of Emory University, the Simon School of Business of the University of Rochester and at the Arizona State University College of Business.
Hank’s research and teaching interests include Financial Management, International Finance, Stock Markets, Foreign Exchange Markets, Energy Markets, Trading Costs, Trading Strategies, and Financial Risk Management. His research has been published in the top Finance outlets, including the
Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies.
He is Managing Editor of the Journal of Financial and Quantitative Analysis, and Associate Editor of the Journal of Finance, the Journal of Financial Economics, and the Journal of Financial Markets.
Hank has taught university courses in corporate finance, investments, financial markets, and financial engineering, at the masters and doctoral levels, having been nominated for and received teaching awards. He has been a consultant to the New York Stock Exchange, Goldman Sachs, Barclay’s Global Investors, the United States Department of Justice, the United States Securities and Exchange Commission, the Federal Energy Regulatory Commission, the Commodities Futures Trading Commission, Analysis Group, and Cornerstone Research, among others.
Published in:
Publication year: 1999
Co-author 1: Michael L. Lemmon
We consider retail prices and efficiency gains from wholesale trading in both regulated and competitive power markets. Wholesale power trading facilitates risk sharing, so that the minimally-required retail price decreases for all producers. A portion of the efficiency gains can be captured by use of bilateral foward contracts arranged in advance, while the remainder requires real-time trading. There is cross-sectional variation in the benefits from wholesale trading, with the largest efficiency gains accruing in regions with low power betas. Prices in competitive markets depend on system production capacity. We consider the special case where capital investment was selected to minimize expected costs in the absence of wholesale markets, and show that competition decreases prices but imposes economic losses on producers. That is, the so-called stranded investment problem can exist even with ex ante efficient capital investment.