Abstract
We study how market deregulation affects the upstream industry both theoretically and empirically. Our theory predicts that firms respond to increases in uncertainty due to deregulation by writing more rigid contracts with their suppliers. Using the restructuring of the U.S. electricity market as our case study, we find support for our theoretical predictions. Our findings imply a greater emphasis on efficiency at coal mines contracting with restructured plants. The evidence suggests a 17% improvement in productivity at these mines, relative to those contracting with regulated plants. We find, on the other hand, that transaction costs may have increased. We conclude that deregulation has significant impacts upstream from deregulated markets.
Original language | English |
---|---|
Pages (from-to) | 35-83 |
Number of pages | 49 |
Journal | International Journal of Industrial Organization |
Volume | 57 |
Early online date | 5 Jan 2018 |
DOIs | |
Publication status | Published - Mar 2018 |
Keywords
- Coal Use
- Energy
- Electricity Market Restructuring
- Procurement Contracts
- Efficiency
- Transaction Costs
Profiles
-
Corrado Di Maria
- School of Economics - Professor of Environmental & Natural Resource Economics
- Research and Innovation Services - ClimateUEA Academic Chair
- Centre for Social and Economic Research on the Global Environment (CSERGE) - Member
- Tyndall Centre for Climate Change Research - Member
- Applied Econometrics And Finance - Member
- Economic Theory - Member
- Environment, Resources and Conflict - Member
- ClimateUEA - Member
Person: Research Group Member, Research Centre Member, Academic, Teaching & Research
-
Emiliya Lazarova
- School of Economics - Professor in Economics
- Applied Econometrics And Finance - Member
- Economic Theory - Member
Person: Research Group Member, Academic, Teaching & Research