2019

Strategic Withholding through Production Failures

Reprint No. 2019:65

Author(s): Sara Fogelberg and Ewa LazarczykYear: 2019 Title: Energy Journal Volume (No.): 40 (5) Pages: 247–266
Online article (restrictions may apply)

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 an instrumental variable approach and data from the Swedish electricity market to examine such behavior. In a market without strategic withholding, reported production failures should not depend directly on the market price. We show that marginal producers in part base their decision to report a failure on prices, which indicates that production failures are a result of economic incentives as well as of technical problems.


Reference:
Fogelberg, Sara and Ewa Lazarczyk (2019), "Strategic Withholding through Production Failures". Energy Journal 40(5), 247–266.

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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