Electricity market for the year 2006 and to compute resulting industry investment choice for the different hypothesis of perfect competition, monopoly and strategic behavior of firms.

In order to use our theoretical specifications. We assume linear, set of available technologies, given

model for the analysis we chose to make the following fluctuating demand P (Q) = θ bQ. and derive the by the pairs of annuities of investment cost on the one

hand and production cost on the other. For a given demand distribution, and for given investment and production cost structure k(c), firms investment choices can be calculated as given in theorems 1 2 and 3. The resulting investment choices allow us to derive the price distribution for all 8760 hours of the year and to compare to the observed price distribution.

The major purpose of such empirical analysis is to provide a practical illustration how the theoretical results can be used in order to derive firms investment decisions and result- ing wholesale electricity prices for different market structures. The Model parameters are determined as follows:

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0

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b Figure 5: Fitting a Weibull distribution ( = 2, MLE for the parameter: β = 368.31) to

the frequency distribution of intercepts f(θ).

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