Competition in Power Generation with Heterogeneous Technologies.

We propose a simple model of competition for the production of energy between a thermal station and an hydrostation. We show analytically and geometrically that, despite its static characteristics, the output from the thermal station is determined by the intertemporal specifications of costs and utility. This results from the scarcity of the water resource. We analyze this interdependancy in the case of a social planner who maximizes the net total utility from electricity ad well as in the case of competition in quantities between two private firms.