Applied Seminar

Stein-Erik Fleten (with M. Johansen, A. Pichler and C. J. Ullrich)

Norwegian University of Science and Technology

4-June-2018

Seminar 1 – 11:30

Abstract

This paper examines empirically how regulatory uncertainty, strategic interactions and other factors affect managers decisions to switch between operating and stand-by states for peaking electric power generators. We use structural estimation, where the switching decisions are assumed to be governed by a real options model. We focus on the power markets in the Northeastern United States, where annual observations of such decisions are available. The results indicate that regulatory uncertainty significantly increases firms’ perception of switching costs.

Leave Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

clear formSubmit