Abstract
We investigate the market implications of ownership of a new low-cost production technology. We relate our theoretical findings to measure the impact of renewable energy penetration into electricity markets and examine how the ownership of renewable capacity changes market outcomes (prices, outputs, emissions). As current public policies influence renewable energy ownership, this research provides useful insights for policy makers. We show how and why ownership of renewable capacity matters when there is market power in energy market. We apply our findings to the wholesale electricity market in Ontario, Canada, to analyze the impact of different ownership structures for wind capacity expansions. Using both simulation analysis and empirical analysis of market data, we show that the price-reducing effects of wind expansion are smaller when a larger strategic firm owns new wind capacity. Lastly, we show that the effect of wind ownership on emissions depends on both the amount of generation displaced by wind output and the emissions rate of displaced generation.
Original language | English (US) |
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Pages (from-to) | 213-238 |
Number of pages | 26 |
Journal | International Journal of Industrial Organization |
Volume | 63 |
DOIs | |
State | Published - Mar 2019 |
Keywords
- Greenhouse gas emissions
- Market structure
- Renewable energy
- Technology ownership
ASJC Scopus subject areas
- Industrial relations
- Aerospace Engineering
- Economics and Econometrics
- Economics, Econometrics and Finance (miscellaneous)
- Strategy and Management
- Industrial and Manufacturing Engineering