Working Paper No. 1015

Strategic Withholding through Production Failures

Published: March 31, 2014Pages: 31Keywords: Electricity markets; Urgent Market Messages (UMMs); Unplanned failuresJEL-codes: L49; L94

Strategic Withholding through Production Failures Sara Fogelberg and Ewa Lazarczyk

Anecdotal evidence indicates that electricity producers use production failures to disguise strategic reductions of capacity in order to influence prices, but systematic evidence is lacking. We use a quasi-experimental set up and data from the Swedish energy market to examine such behavior. In a market without strategic withholding, the decision of reporting a failure should be independent of the market price. We show that marginal producers in fact base their decision to report a failure in part on prices, which indicates that failures are a result of economic incentives as well as of technical problems.

Ewa Lazarczyk


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Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

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In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


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