درک قیمت گذاری رقابتی و قدرت بازار در بازار برق عمده فروشی
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : The Electricity Journal, Volume 13, Issue 6, 3 July 2000, Pages 49–57
Discussions of competition in restructured electricity markets have revealed many misunderstandings about the definition, diagnosis, and implications of market power, including the common myths that it is present in all markets and that it must be present in order for firms with significant fixed costs to remain profitable.
A firm exercises market power when it reduces its output or raises the minimum price at which it is willing to sell output (its offer price) in order to change the market price. A firm that is unable to exercise market power is known as a price taker; the firm makes decisions taking the price it faces for its output as given, believing that the actions it takes cannot change that price. Common examples of price-taking firms are wheat, rice, corn, or soybean farmers; gold, silver, or platinum mining companies; and natural gas producers. Many industry observers suggest that producers of oil are price takers, while others argue that the Organization of Petroleum-Exporting Countries (OPEC) is able, as a group, to manipulate oil prices. OPEC has certainly tried to do this, but frequently has had difficulty dissuading its members or other non-OPEC producers from responding individually to higher oil prices by increasing their production. Aprice-taking firm is willing to sell output so long as the market price (which it believes that it cannot profitably influence) is above the firm's marginal cost of producing and selling the output, properly calculated. In the electricity industry, the marginal cost of production will include variable costs due to fuel and the other variable operating and maintenance costs, i.e., all costs that actually vary with the quantity of power that the plant produces. Costs that don't vary with the quantity of power the plant produces in the given time period, such as fixed costs of operating and maintaining the plant, are not part of the marginal cost and are thus irrelevant to the firm when it makes its short-run production decision. Still, the cost of selling a unit of electricity can be greater than the simple production costs if the firm has an opportunity cost that is greater than its production cost. An opportunity cost is the revenue the firm would get from putting the power to an alternative use, such as selling it in a different location. For instance, a power producer in the northwestern United States can sell power (1) into California, (2) in its own location, or (3) in some other location in the Western Systems Coordinating Council (WSCC). If the producer expects that it can earn $21/MWh selling the power in another location, and if transmission were available and no more costly than transmission into California, then it would not be willing to offer power in California for any price less than $21/MWh. This would not indicate market power: The firm is not raising its offer price in California in order to raise the California market price. It is simply choosing to sell power where the price is highest. The marginal cost that a firm faces for selling power is the greater of its marginal production cost and its opportunity cost. Of course, a high price in an alternative market can reflect market power in that market, resulting in high prices that are then transmitted across markets by the response of competitive suppliers. It is important to understand that a price-taking firm does not sell its output at a price equal to the marginal cost of each unit of output it produces. It sells all of its output at the market price, which is set by the interaction of demand and all supply in the market. The price-taking firm is willing to sell at that market price any output that it can produce at a marginal cost less than that market price. In markets run as uniform-price auctions, such as the day-ahead market run by the PX, a price-taking seller that wishes to maximize its profits would bid its power into the market at its own marginal cost. That is not the price it would receive for its power. It would receive the price that equates the entire supply and demand in the auction. It would then be awarded sales exactly equal to the quantity of power that it could produce at a marginal cost less than or equal to the market price. Note that this means it would produce all power for which its marginal cost is less than the market price, and it would not produce any power for which its marginal cost is greater than the market price. If the industry marginal cost (i.e., supply) function, which is the aggregation of all firms' supply functions, exhibits distinct steps—as is often thought to be the case in the electricity industry—then a competitive market equilibrium may be reached at which the price exceeds the marginal cost of even the last unit of output produced, but is still less than the marginal cost of producing one more unit of output (Figure 1). Similarly, if all units of production are in use, then the intersection of supply and demand can occur at a price above the marginal production cost of any unit (Figure 2). Thus, in the absence of market power exercised by any seller in the market, price may still exceed the marginal production costs of all facilities producing output in the market at that time.Because a price-taking firm sells its output at the market price, and that market price is usually above the marginal production cost of all or almost all the output it produces, price-taking firms can still cover their full costs of production, including their going-forward fixed costs of operation. This is illustrated in Figure 3 for a single price-taking firm: The area above the firm's marginal cost curve and below the price line is revenue that contributes to covering fixed costs of operation. It is possible that this area is greater or less than the firm's fixed costs of operation. If it is less than the firm's fixed costs, the firm will eventually shut down or at least scale back its operations. If the area is greater than fixed costs, this is a signal that the firm (or some competitor) might be able to profitably expand. Assuming that there are no barriers to either new entry or existing firm expansion, large profits among existing generators would likely lead to entry of new firms and plants that would drive down prices and dissipate extranormal profits.Some analysts of the electricity industry have raised the concern that price-taking behavior on the part of every firm is simply too strict a standard to be used as a benchmark. They argue that it is unrealistic to think that no market power will exist, because there is market power present in most markets. Though market power exists in many markets, there are also many markets in which virtually no market power exists—most agricultural and natural resource markets, for instance. These industries are notable for producing virtually homogenous products and selling them over a large geographical area, characteristics that bear an important similarity to the electricity industry. A more extreme view than the inevitability of market power is the view that market power is necessary to allow firms to cover their total costs of operation. In the absence of market power, the argument goes, marginal cost pricing will leave nothing to cover fixed costs and firms will not be profitable enough to survive. This view represents an unfortunate confusion about the economics of competitive markets. Price-taking behavior, a precondition for competitive markets, means simply that a firm is producing every unit of output that it can produce at a marginal cost below the market price and is not producing any output for which its marginal cost is greater than the market price. Thus, most or all output produced is produced at a marginal cost below the market price, and the difference between price and the marginal cost of each unit of output makes a contribution toward fixed costs. During very-high-demand times, for instance, price spikes will occur even in competitive markets as price rises to ration demand to the available supply. In a competitive market, however, all output that can be produced at a marginal cost less than the market price will be produced, and no generator will inflate its offer bid in an attempt to raise the market price.1 if the net revenue earned (after covering variable operating costs) is more than is necessary to cover the fixed costs for some type of generation, then in a competitive market with no barriers to entry, new generation of that type will enter the market. If the net revenue is less than is necessary to cover the fixed costs for some type of generation, then some generators of that type are likely to exit. When exit occurs, the supply curve in the industry shifts to the left and the equilibrium market prices rise, so that all remaining firms earn higher prices and greater contributions to fixed costs. In a competitive market, this process of entry and exit occurs until, in long-run equilibrium, all generators in the market are able to cover their fixed costs and no other generator could enter and cover its fixed costs at the current market prices. There is no economic argument for the necessity of market power to ensure the viability of the industry. Note that this does not mean that all current capacity in an industry will be able to cover its (past) sunk investment costs or even its fixed going-forward costs in a deregulated market. Some firms or generating units may have to exit the market because they cannot cover their total going-forward costs of operation. This can occur because such generators are just not sufficiently efficient to be viable in a competitive market, or because there is simply too much capacity in the market and some of it must exit in order for the market price to rise to a level that allows the remaining firms to break even as an outcome of the competitive supply/demand process. The numerical illustration in the inset on p. 53 provides an example of this.
نتیجه گیری انگلیسی
The diagnosis and measurement of market power is just one step in the process of developing sound public policy in a market. When market power is found to be present, the logical next step is to examine the likely persistence of that market power. In markets with low barriers to entry, market power is likely to be quite transitory. The profits from market power will attract new entrants into the market or encourage incumbents to expand in order to gain market share.4 In that case, the best government policy would probably be to let these forces do their work undermining the existing market power.5 On the other hand, if entry is likely to be slow, due to institutional, regulatory, or other barriers, more active public policy may be wise. Government intervention, however, has its own formidable costs. History teaches us that regulators have a difficult time figuring out the best prices, technologies, or levels of investment in an industry. Regulators also are susceptible to the influences of private parties who encourage them to take actions that do not benefit the general public. And, of course, it is very difficult for regulators to limit the returns that firms can earn without dampening their incentives for efficiency and innovation. Thus, it is clear that some degree of market power in an industry is preferable to heavy-handed regulation, with all of the inefficiencies that accompany such regulation. None of these concerns, however, lessens the importance of analyzing and estimating the degree of market power in an industry. They simply mean that a finding of market power is just one part of a public policy debate about government intervention in an industry. The important public policy question is what amount of market power is acceptable, and which, if any, government policies are likely to do more good than harm.