make human capital investment ex ante and to exert eÞort ex post. This trade-off between control and incentive thus decides …

analysis of investment incentives is still missing. Existing models, as the peak-load-pricing approach, analyze welfare optimal … fluctuating (and possibly uncertain) demand. We study how the degree of spot market competition affects investment incentives and … prices strictly decrease investment incentives of strategic firms. The reduction of investment incentives can be so intense …