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The structure of the electricity market: the market of forward contracts and incentives for collusion

Effect of forward trading in the spot market operation is the subject of ongoing debate. Nevertheless, deregulation of electricity markets in many countries was based on the thesis that the conclusion of forward contracts increases competition generating companies on the spot market. The purpose of this paper is to analyze the effect of forward market incentives to collusion among the generating companies in the spot segment of the wholesale electricity market of the Russian Federation. It is shown that under certain circumstances forward trading can facilitate the collusion in the spot market. And this effect can be eliminated by some of the characteristics of market structure.

Collusion: economic theory and antitrust policy

The article continues series of studying-methodical materials for «Theory of industrial organization" course. This publication presents materials about factors influencing the incentives of firms to coop¬erate and set agreements. There are some case-studies inside dedicated to the problems of antitrust policy against collusive firms.