Competition with forward contracts: a laboratory analysis motivated by electricity market design
| Authors |
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| Publication date | 2008 |
| Journal | Economic Journal |
| Volume | Issue number | 118 | 525 |
| Pages (from-to) | 192-214 |
| Number of pages | 23 |
| Organisations |
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| Abstract | We use experiments to study the efficiency effects of adding the possibility of forward contracting to a spot market. We focus on the strategic implications of a forward market and consider both quantity and supply function competition. In both cases we compare the effect of adding a contract market to the introduction of an additional competitor. We find that, as theory suggests, for both types of competition the introduction of a forward market significantly lowers prices. The combination of supply function competition with a forward market leads to high efficiency levels. |
| Document type | Article |
| Language | English |
| Published at |
https://doi.org/10.1111/j.1468-0297.2007.02109.x
(Final published version)
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| Permalink to this page | |
