Coordinating Supply Schedules by Asymmetric Cost Transmission, Carbon Prices and the Electricity Spot MarketPreliminary Version

摘要

In January 2007, first evidence of an asymmetric transmission of emission al- lowance prices was reported for the German electricity spot market. The here presented paper explores the theoretical basis which might explain such market outcomes. Institutional settings of the spot market (competition in supply func- tions, the market clearing mechanism) exclude any other but strategical behaviour as a source for the asymmetry. The study at hand interprets the fluctuation of allowance prices as a coordination mechanism for tacitly colluding firms and stud- ies incentive compatibility in supply function bidding. It therefore settles aside of the classical signalling literature in using an external signal for coordination, and it is new to the supply function equilibrium literature in explicitly incorporating tacit collusive mechanisms beyond the Cournot outcome. Moreover, it is new to the `rockets and feathers' literature by modelling asymmetric behaviour at a spot market without any relevant frictions. In the stylised representation of an electric- ity spot market (a symmetric linear supply function duopoly model), I can proof three successive claims, implying that asymmetric price transmission is incentive feasible up to a certain level which might include the monopoly solution and that coordination of the supply schedules is always preferred to the non-cooperative equilibrium. The question of timing and signal quality together with these three claims can serve as an explanation why asymmetric cost transmission is reported only for the emission allowance price and not for other inputs. An implication for policy advice is that distortional effects of new regulatory measures might work not only through the purely economic sphere, but also through the informational framework of neighbouring markets.