Secret Bilateral Forward Contracting

Geert Van Moer

doi:10.1111/joie.12372

Secret Bilateral Forward Contracting

Geert Van Moer

Economics, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

Abstract

I analyze secret bilateral forward contracting in a Cournot oligopoly. A secret bilateral forward contract affects the production quantities of the firms which are party to the contract but not of the outsiders. On the one hand, forward contracts facilitate for heterogeneous firms to rationalize production across facilities. On the other hand, firms also consider how forward contracting affects their combined production. I show that the spot market is less concentrated than the ownership of dispatchable facilities in the industry. Furthermore, the ownership distribution of nondispatchable facilities is irrelevant for consumer welfare. I discuss implications for policy in electricity markets.

Original language	English
Peer-reviewed scientific journal	The Journal of Industrial Economics
Number of pages	41
ISSN	0022-1821
DOIs	https://doi.org/10.1111/joie.12372
Publication status	Published - 20.11.2023
MoE publication type	A1 Journal article - refereed

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 7 Affordable and Clean Energy
SDG 12 Responsible Consumption and Production
SDG 13 Climate Action

Keywords

511 Economics

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Secret Bilateral Forward Contracting

Abstract

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