Equilibrium investment is reduced if we allow for forward contracts
- Grimm, Veronika
- Zoettl, Gregor
Revue:
Working papers = Documentos de trabajo: Serie AD
Année de publication: 2006
Número: 5
Type: Working Paper
Résumé
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.