Strategic Pricing when Electricity is Storable

  title={Strategic Pricing when Electricity is Storable},
  author={Alfredo Garcia},
In this paper, we develop a dynamic Bertrand model of competition among hydroelectric (hydro) generators. Unlike other competitors in electricity generation markets, hydro generators’ current pricing decisions affect their future productive capacity through their impact on available water reserves. Our model assumes that each player uses a Markov strategy based on the current state of water reserves, and water replenishment is governed by a stochastic process. Our analysis develops useful… CONTINUE READING