We are now indirectly revisiting the last two model exercises. This time we ask you to adjust the number of firms in our little electricity market.

Again the coal firms are the dominant players in the market with all other firms behaving competitively. But this time, you are allowed to decide how many coal firms are active in the market and competing with each other. So you are free to design a monopoly market by reducing the number of firms to only one or move towards perfect competition by shifting the number up to the maximum.

In addition, you are tasked to decide about the CO₂ tax level. Try to manage this system. Watch out for differences your policy choice has with different levels of competition.

Note: If you want to keep a certain result for later use we suggest that you make a screenshot (Command-Shift-3 for Mac or CTRL+PrtScn for Windows) and download it.

Exercise

Steering firms: from one to many