Up til now, your firms have behaved well: they competed nicely against each other, even if one firm became dominant, it did not abuse its power.

Unfortunately, this is a somewhat optimistic view. In reality, firms can have market power. In fact, in many countries, market power is ubiquitous in energy markets.

Let us see how this alters your results. To this end, we revisit the setting of the previous model but make two fundamental changes: we assume that the firm using a coal-fired power plant is big and tends to abuse its power, that is, it tries to manipulate the market price to its advantage. All other firms behave competitively. Second, we take out nuclear power, as we only want to have one big firm to keep things simple (and nuclear power stations are typically as large as (or even larger than) coal-fired ones).

Try to manage this system. Watch out for differences to the previous model.

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: what a difference a monopoly makes