Pivotal suppliers and market power in experimental supply function competition

Jordi Brandts, Stanley S. Reynolds, Arthur Schram

Research output: Contribution to journalArticle

8 Scopus citations

Abstract

We use experiments to study market power with supply function competition, akin to the competition in electricity markets. Our treatments vary the distribution of demand levels as well as the amount and symmetry of the allocation of production capacity between different suppliers. We relate our results to a descriptive power index and to the predictions of two models: a supply function equilibrium (SFE) model and a multi-unit auction (MUA) model. Observed behaviour is consistent with the equilibria of the unrestricted SFE model and inconsistent with the unique equilibria of two refinements of the SFE model and of the MUA model.

Original languageEnglish (US)
Pages (from-to)887-916
Number of pages30
JournalEconomic Journal
Volume124
Issue number579
DOIs
StatePublished - Sep 2014

ASJC Scopus subject areas

  • Economics and Econometrics

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