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⚠️ Event canceled due to circumstances beyond our control. It will be rescheduled at a later date, which will be communicated soon. Thank you for your understanding.
Speaker: Junnan He, Assistant professor at Sciences Po department of economics.
Title: Diversified Production and Market Power: Theory and Evidence from Renewables
English presentation.
Abstract: We study the Colombian energy market, where diversified energy firms strategically substitute thermal generation for hydropower before droughts. This withinfirm substitution, due to thermal generators internalizing the drop in hydropower supply during droughts, mitigates higher market prices. We show theoretically and empirically that these virtuous spillovers exist when thermal generators have market power but are severed when their residual demands are vertical or horizontal, which attenuates a firm’s business stealing incentives. We conclude that industry consolidation can reduce prices if it promotes diversified production portfolios. Diversification can keep the green transition affordable by reducing the cost of renewable intermittencies.
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