Steven L. Puller
(Texas A&M University)
This article analyzes the pricing behavior of electricity generating firms in the restructured California market from its inception in April 1998 until its collapse in late 2000. Using detailed firm-level data, I find that conduct is relatively consistent with a Cournot pricing game in 1998-99. In summer and fall 2000, behavior was distinctly less competitive, yet the dramatic rise in prices was more driven by changes in costs and demand than by changes in firm conduct. The five large non-utility generators raised prices slightly above unilateral market power levels in 2000, but fell far short of efficient tacit collusion.
Download this paper in Adobe Acrobat format: http://www.ucei.org/PDF/pwp080.pdf
The document can be downloaded or viewed using Adobe's Acrobat Reader
(version 3.0 or later). If you do not have Acrobat Reader, you can download it
from Adobe. To DOWNLOAD the documents right mouse click on the name and then
click again on "Save link as..."