An Oligopolistic Electricity Model with Interdependent Market Segments

In this paper, we model a two-period electricity market with interrelated demand, where oligopolistic generators make investments in peak- and base-load capacities. Different prices are obtained in the two periods, and residential consumers can react to prices across demand periods. We characterize the Cournot equilibrium obtained as a function of price and cross-price effects and present a numerical illustration based on the Ontario (Canada) electricity market.