CYCLICAL BEHAVIOUR IN ELECTRICITY MARKETS: AN EXPERIMENTAL STUDY

摘要

This paper describes a laboratory experiment to study cyclical behaviour of electricity prices in deregulated electricity markets. We observe investment decisions in markets with five-producers, linear demand, and constant marginal costs. The experiment has a four year investment lag and the electricity generating capacity has a life time of 16 years. Oscillatory behaviour results in investment activity and prices. The cyclical tendency is stronger than in previous experimental studies with only one and two period investment lags. Average prices are closer to competitive equilibrium than in previous experiments. The results are consistent with bounded rationality theory; a simple heuristic produces fluctuations similar to those observed when applied in a simulation model. Hence, the results corroborate assumptions made in previous simulation studies.