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|Title:||Competition with forward contracts: a laboratory analysis motivated by electricity market design|
|Citation:||Economic Journal, 2008; 118(525):192-214|
|Publisher:||Blackwell Publ Ltd|
|Jordi Brandts, Paul Pezanis-Christou and Arthur Schram|
|Abstract:||We use experiments to study the efficiency effects of adding the possibility of forward contracting to a spot market. We focus on the strategic implications of a forward market and consider both quantity and supply function competition. In both cases we compare the effect of adding a contract market to the introduction of an additional competitor. We find that, as theory suggests, for both types of competition the introduction of a forward market significantly lowers prices. The combination of supply function competition with a forward market leads to high efficiency levels.|
|Appears in Collections:||Economics publications|
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