Allocation of the cost of transmission losses in a multimarket framework

The paper addresses the issue of apportioning of the cost of transmission losses to generators and demands in a multimarket framework. Line flows are unbundled using equivalent bilateral exchanges on a DC-network model and allocated to generators and demands. Losses are then calculated based on unbundled flows and straightforwardly apportioned to generators and demands. The proposed technique is particularly useful in a multimarket framework, where all markets have a common grid operator with complete knowledge of all network data, as is the case of the Brazilian electric-energy system. The methodology proposed is illustrated using the IEEE Reliability Test System and compared numerically with an alternative technique. Appropriate conclusions are drawn. © The Institution of Engineering and Technology 2006.

Leniency programs, antitrust enforcement and multimarket contact : three essays in industrial organization

The Layout of My Thesis This thesis contains three chapters in Industrial Organization that build on the work outlined above. The first two chapters combine leniency programs with multimarket contact and provide a thorough analysis of the potential effects of Amnesty Plus and Penalty Plus. The third chapter puts the whole discussion on leniency programs into perspective by examining other enforcement tools available to an antitrust authority. The main argument in that last chapter is that a specific instrument can only be as effective as the policy in which it is embedded. It is therefore important for an antitrust authority to know how it best accompanies the introduction or modification of a policy instrument that helps deterrence. INTRODUCTION Chapter 1 examines the efféct of Amnesty Plus and Penalty Plus on the incentives of firms to report cartel activities. The main question is whether the inclusion of these policies in a leniency program undermine the effectiveness of the latter by discouraging the firms to apply for amnesty. The model is static and focus on the ex post incentives of firms to desist from collusion. The results suggest that, because Amnesty Plus and Penalty Plus encourage the reporting of a second cartel after a first detection, a firm, anticipating this, may be reluctant to seek leniency and to report in the first place. However, the effect may also go in the opposite direction, and Amnesty Plus and Penalty Plus may encourage the simultaneous reporting of two cartels. Chapter 2 takes this idea further to the stage of cartel formation. This chapter provides a complete characterization of the potential anticompetitive and procompetitive effects of Amnesty Plus in a infinitely repeated game framework when the firms use their multimarket contact to harshen punishment. I suggest a clear-cut policy rule that prevents potential adverse effects and thereby show that, if policy makers follow this rule, a leniency program with Amnesty Plus performs better than one without. Chapter 3 characterizes the socially optimal enforcement effort of an antitrust authority and shows how this effort changes with the introduction or modification of specific policy instruments. The intuition is that the policy instrument may increase the marginal benefit of conducting investigations. If this effect is strong enough, a more rigorous detection policy becomes socially desirable.