We appraise the theoretical basis and the consequent empirical work of Frank Wolak in his study of the New Zealand electricity market in a report to the New Zealand Commerce Commission released in March 2009. The report found no multilateral actions, but concluded there was evidence of...

We demonstrate that a multi-period model, and the valuations it implies, is essential for understanding inefficiency in cooperative organizational forms. Investment is efficient given the supply of input, but economic inefficiency arises because of over-supply of input induced by suppliers...

We present a model featuring irreversible investment, economies of scale, uncertain future demand and capital prices, and a regulator who sets the firm’s output price according to the cost structure of a hypothetical replacement firm. We show that a replacement firm has a fundamental cost...

This paper uses a new model of a competitive electricity market to investigate the role of storage in markets dominated by hydro generation. Competition among generators leads to an endogenous shadow price of stored water, which facilitates the efficient intra-day and inter-season substitution...