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David Benatia – "Strategic Reneging in Sequential Imperfect Markets"
Internal Seminar in Microeconomics :
Date: 17th June 2019
Place: Room 3105.
David Benatia – “Strategic Reneging in Sequential Imperfect Markets”
Abstract: This paper investigates the incentives to manipulate sequential markets by strategically reneging on forward commitments. First, we study the behavior of a monopolist in a two-period model with demand uncertainty. Our results deliver guidance for identifying manipulations and evaluating its market impacts. Second, we test the model’s predictions using occurrences of reneging on long-term commitments in Alberta’s electricity market. We implement a machine learning approach to identify and evaluate manipulations. We find that a dominant supplier increased its revenues by $32 million in five months, causing Alberta’s electricity procurement costs to increase by above $300 million.
Alexis Larousse (CREST)
no registration needed