Equilibrium investment is reduced if we allow for forward contracts

  1. Grimm, Veronika
  2. Zoettl, Gregor
Zeitschrift:
Working papers = Documentos de trabajo: Serie AD

Datum der Publikation: 2006

Nummer: 5

Art: Arbeitsdokument

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Zusammenfassung

In this paper we analyze incentives to invest in capacity prior to asequence of Cournot spot markets with varying demand. We compareequilibrium investment in the absence and in presence of the possibility to tradeon forward markets. We find that the possibility to trade forwards reducesequilibrium investments.

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