Article ID: | iaor200971664 |
Country: | United States |
Volume: | 55 |
Issue: | 11 |
Start Page Number: | 1813 |
End Page Number: | 1831 |
Publication Date: | Nov 2009 |
Journal: | Management Science |
Authors: | Banal-Estaol Albert, Micola Augusto Ruprez |
Keywords: | electricity |
We use simulations to study how the diversification of electricity generation portfolios influences wholesale prices. We find that the relationship between technological diversification and market prices is mediated by the supply-to-demand ratio. In each demand case there is a threshold where pivotal dynamics change. Pivotal dynamics pre- and post-threshold are the cause of nonlinearities in the influence of diversification on market prices. The findings are robust to changes in the main market assumptions.