@article{0efe71d59e514b98b0acaa5ed4321b0c,
title = "Market design and supply security in imperfect power markets",
abstract = "Supply security in imperfect power markets is modelled under different market designs. In a uniform price auction for electricity with two firms, strategic behaviour may leave firms offering too few capacities and unable to supply all realized demand. Market design that relies oncapacity markets increases available generation capacities for sufficiently high capacity prices and consequently decreases energy prices. However, equilibrium capacity prices are non-competitive. Capacity markets can increase security of supply, but cannot mitigate market power, which is exercised in the capacity market instead of the energy market.",
keywords = "Auctions, Electricity, Market design",
author = "Sebastian Schwenen",
note = "Funding Information: This article was part of my PhD thesis at the Economics Department at Copenhagen Business School. The author gratefully acknowledges financial support from the Danish Social Science Research Council ( 09-061934 ) and would like to thank Anette Boom, Clinton Levitt and Peter M{\o}llgaard for the detailed and substantial suggestions on earlier drafts. Participants at the 2010 International Industrial Organization Conference in Vancouver and at the 2010 International Association for Energy Economics European Conference in Vilnius provided helpful comments. The author also would like to thank Sophia Ruester and Jean-Michel Glachant for their support during the resubmission process. Two anonymous reviewers contributed with excellent and helpful feedback. ",
year = "2014",
month = may,
doi = "10.1016/j.eneco.2014.02.012",
language = "English",
volume = "43",
pages = "256--263",
journal = "Energy Economics",
issn = "0140-9883",
publisher = "Elsevier B.V.",
}