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Pricing Patterns in Wholesale Electricity Markets: Unilateral Market Power or Coordinated Behavior? *
Author(s) -
Brown David P.,
Eckert Andrew
Publication year - 2022
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12284
Subject(s) - electricity , profit maximization , business , market power , microeconomics , industrial organization , profit (economics) , electricity market , electricity pricing , maximization , electricity retailing , economics , monopoly , electrical engineering , engineering
We examine allegations that firms in Alberta's electricity industry manipulated public information to coordinate in the wholesale market. We investigate whether bids by firms who employed unique pricing patterns were consistent with unilateral expected profit maximization. Our results suggest that these firms could have increased expected profits through unilateral deviations. For one firm, the potential to increase profits is greater on days when certain offer patterns are observed, providing support for the claim that such patterns may have assisted coordination on high‐priced outcomes. These results suggest that regulators should exercise caution when designing information disclosure policies in concentrated electricity markets.