Embedded Files
Published Papers:
Unilateral Price Effects in Horizontal Mergers with Capacity Constraints (Competition Policy International, Antitrust Chronicle, April 2026)
Upward Pricing Pressure in Horizontal Mergers with Fuzzy Capacity Constraints (Economics Letters, 2025, Presented at CRESSE 2025)
Estimating Private Values in a Descending Clock Auction: The FCC’s Rural Digital Opportunity Fund (Telecommunication Policy, 2025)
Procurement Auctions for Broadband Access: Starlink and the Rural Digital Opportunity Fund (Telecommunication Policy, 2025)
The Optimal Mix of Thermal Capacity in a Load Duration Curve Model with Reserve Demands (Energy Economics, 2025; with Alexander Galetovic)
Working Papers:
Market Allocation in Differentiated Bertrand Models (with Martino De Stefano and Serge Moresi; Presenting at NIE 2026 and CRESSE 2026)
A Guide To Incorporating Capacity Constraints into Upward Pricing Pressure (UPP) Analysis (SSRN)
Marginal Cost Pricing and Efficient Make-Whole Payments in Electricity Markets (SSRN)
Solving Air Pollution with Second-Best Policies: Firewood Burning and Residential Heating in Chile
Other Articles and Web Blog Posts
Conviviendo con el covid-19 [Coliving with Covid-19] (with Alexander Galetovic). Centro de Estudios Públicos (CEP), 2020.
Galetovic, A., & Núñez, I. J. (2017, May 4). Servicios complementarios: suministro y remuneración eficiente de reservas en sistemas de potencia [Ancillary services: supply and efficient pricing of reserves in power systems]. Web blog post. Breves de Energía.
Núñez, I. J. (2017, April 26). ¿Qué son los servicios complementarios? [What are ancillary services?]. Web blog post. BrevesdeEnergía.
Núñez, I. J. (2016, April 12). ¿Quién emite gases de efecto invernadero en Chile? [Who emit greenhouse gases in Chile?]. Web blog post. BrevesdeEnergía.
Núñez, I. J. (2015, December 16). ¿Por qué ha caído el costo marginal de la energía en el Sistema Interconectado Central de Chile? [Why did the marginal cost of energy fall in the Chilean central power system?]. Web blog post. Breves de Energía.
Núñez, I. J. (2015, February 25). Generación eólica y solar fotovoltaica: ¿Qué tan variables son? [Wind and solar photoltaic power: how variable are they?]. Web blog post. Breves de Energía.
1. Unilateral Price Effects: Horizontal Mergers with Capacity Constraints
1.1 Upward Pricing Pressure in Horizontal Mergers with Fuzzy Capacity Constraints (Economics Letters, 2025, Presented at CRESSE 2025)
I examine the effect of fuzzy capacity constraints on horizontal mergers. In the model, each firm must turn away an exogenous fraction of its potential customers after it reaches a baseline capacity level. I derive an upward pricing pressure (UPP) formula accounting for fuzzy capacity constraints. Capacity constraints influence post-merger prices through three primary channels: (i) decreased diversion between the merging firms, which mitigates post-merger price effects; (ii) additional diversion from rejected customers coming from non-merging firms, which increases post-merger price effects; and (iii) feedback effects that mitigate post-merger price effects.
1.2 Unilateral Price Effects in Horizontal Mergers with Capacity Constraints (Competition Policy International, Antitrust Chronicle, April 2026)
This article reviews how capacity constraints affect unilateral price effects in horizontal mergers. When capacity constraints fall on merging firms, they mitigate price effects, whereas constraints on non-merging firms enhance price effects. Capacity constraints can be modeled as strict production limits, fuzzy acceptance, or upward marginal costs. Different models have different observable implications and data requirements, and can lead to different price effects. Guidance is provided to select the appropriate model given the available evidence.
1.3 A Guide To Incorporating Capacity Constraints into Upward Pricing Pressure (UPP) Analysis (SSRN)
This paper provides a guide to antitrust economists to incorporate capacity constraints into Upward Pricing Pressure (UPP) analysis. As shown, capacity constraints can be modelled in (at least) three ways: (i) strict capacity limits, which once they are reached, firms cannot serve new customers; (ii) fuzzy limits in which firms have a partial ability to serve new customers and must reject a share; and (iii) upward-sloping marginal costs as output approaches capacity. UPP formulas are shown for each of these cases, also providing numerical examples and practical considerations to guide the modelling choice.
2. Coordinated Effects: Market Allocation in Bertrand Competition Models
Market Allocation in Differentiated Bertrand Models (with Martino De Stefano and Serge Moresi)
Presenting at NIE 2026 and CRESSE 2026.
We consider market allocation collusive agreements among differentiated Bertrand competitors. The conventional assumption is that cartels select one member to be the active supplier and all other members refrain from competing. However, with differentiated products, designating a single supplier to be active may cause the cartel to lose many sales and thus make collusion unprofitable. We show that cartel members may earn higher expected profits when two or more members are selected to be active (even if they do not collude on price). Furthermore, in a repeated-game framework, we show that selecting more than one member decreases the critical discount factor above which collusion can be sustained. Therefore, screening tools based on the assumption that a cartel selects only one member to be active may generate false negatives.
3. Broadband Subsidy Auctions: Lessons from the FCC's Rural Digital Opportunity Fund
(PhD Dissertation)
In 2020 the Federal Communication Commission (FCC) launched the Rural Digital Opportunity Fund: a descending clock auction that allocated over $9 billion in subsidies to Internet providers willing to expand their infrastructure to unserved rural and low-income areas. In the auction, Internet providers bid the lump-sum subsidy they would accept for each of 61,766 unserved areas. The winners commited to offer high-speed Internet for the next ten years under regulated prices.
3.1 Estimating Private Values in a Descending Clock Auction: The FCC’s Rural Digital Opportunity Fund (Telecommunication Policy, 2025)
This article develops an econometric method to estimate the private values of incumbent wireline providers. In the model, the incumbent bidder bids for each area up to its private value, whereas the incumbent's rivals value the areas as complements and bid solving dynamic problems.
3.2 Procurement Auctions for Broadband Access: Starlink and the Rural Digital Opportunity Fund (Telecommunication Policy, 2025)
This article estimates Starink's private values allowing for fixex cost complementarities. To do this, I derive optimal bidding conditons and invert Starlink's package bids in the auction. I find that Starlink’s rent would have exceeded 58% of their awarded subsidies, which can be explained by their cost asymmetry with other bidders using wireline technologies.
4. Design of Electricity Markets
4.1. Marginal Cost Pricing and Efficient Make-Whole Payments in Electricity Markets (SSRN)
This article studies marginal cost pricing in electricity markets, considering the supply of operating reserves and make-whole payments to cover revenue shortfalls resulting from thermal plants’ non-convex constraints. I characterize a power system’s production set, defined by all combinations of hourly energy and operating reserves to be supplied, as well as all feasible investment and operating decisions. Firms determine their production plan based on market prices for each MWh of energy and reserves provided, along with make-whole payments designed to ensure incentive compatibility. To minimize procurement costs, I show that make-whole payments must compensate for both revenue shortfalls and the opportunity costs of firms choosing alternative production plans. Simulations show that modifying marginal cost pricing to decrease make-whole payments can increase opportunity costs, thereby raising procurement costs.
4.2 The Optimal Mix of Thermal Capacity in a Load Duration Curve Model with Reserve Demands (with Alexander Galetovic, Energy Economics, 2025)
In this paper, we derive the optimal thermal generation mix that minimizes the joint cost of a load duration curve and requirements of reserves. We show that regulation-up reserves, which increase real-time generation when needed, requires additional capacity investments of both peak and base-load technologies. In contrast, regulation-down reserves, which are used to decrease real-time generation, shift the mix towards the peak-load capacity. In the model, we calculate energy and reserves’ marginal costs and show that marginal cost pricing decentralizes the planner’s solution with zero profits.
5. Environmental Economics and Energy Markets
Solving Air Pollution with Second-Best Policies: Firewood Burning and Residential Heating in Chile (Working Paper) | Slides
Firewood burning for residential heating pollutes the air and is one of Chile’s most pressing environmental problems. Using cross-sectional household surveys and a discrete-continuous choice model of fuel choice and heat consumption, I estimate that the current welfare loss from unregulated firewood burning is nearly $350 million per year. I then estimate the effects of two second-best policies: (i) banning firewood, and (ii) subsidizing firewood’s substitutes. I find that banning firewood would solve 97% of the current welfare loss. Price subsidies would solve only 50% of the loss, but subsidies outperform banning firewood in small cities where the cost of air pollution is modest.
6. Public Policies and Covid-19
This article reviews the evolution of Covid-19 cases worldwide and takeaway for public health policy. Published at Centro de Estudios Públicos (CEP), Puntos de referencia (2020, Nov).
7. Long-Term Planning of Power Grids with Renewable and Energy Storage Technologies
(Master's thesis)
Almacenamiento de energía por bombeo (hydro-pumped storage) en el marco regulatorio chileno [Hydro-pumped Storage within the Chilean Regulatory Policy]
My master thesis studies the economics of including hydro-pumped storage capacity in the Chilean Northern Interconnected Power System. I developed two models to study the interaction of energy storage technologies and renewable power: (1) a unit commitment model for the optimal operation of each plant; and (2) an investment model, which nests the unit commitment model, and finds the optimal capacity to be installed of each technology.
8. Web blog posts on Energy Economics
Galetovic, A., & Núñez, I. J. (2017, May 4). Servicios complementarios: suministro y remuneración eficiente de reservas en sistemas de potencia [Ancillary services: supply and efficient pricing of reserves in power systems]. Web blog post. Breves de Energía.
Núñez, I. J. (2017, April 26). ¿Qué son los servicios complementarios? [What are ancillary services?]. Web blog post. BrevesdeEnergía.
Núñez, I. J. (2016, April 12). ¿Quién emite gases de efecto invernadero en Chile? [Who emit greenhouse gases in Chile?]. Web blog post. BrevesdeEnergía.
Núñez, I. J. (2015, December 16). ¿Por qué ha caído el costo marginal de la energía en el Sistema Interconectado Central de Chile? [Why did the marginal cost of energy fall in the Chilean central power system?]. Web blog post. Breves de Energía.
Núñez, I. J. (2015, February 25). Generación eólica y solar fotovoltaica: ¿Qué tan variables son? [Wind and solar photoltaic power: how variable are they?]. Web blog post. Breves de Energía.
9. Presentations
Horizontal mergers with fuzzy capacity constraints (2025, CRESSE, Greece).
Discussant of "Horizontal mergers in industries with congestion effects and capacity enhancing investments" (2025, CRESSE, Greece).
Structural estimation in simultaneous auctions with complementarities. Dynamic structural econometrics summer school (2021, Bonn, Germany).
Leña y contaminación del aire en Chile: un estudio econométrico del costo y beneficio de políticas públicas [Firewood and air pollution in Chile: an econometric study of the cost and benefit of public policies] (2020, September). Chilean Ministry of Energy.
Suministro y tarificación eficiente de reservas en sistemas de potencia [On the efficient Supply of Energy and Reserves in Power Systems] (2017, with Alexander Galetovic). Universidad de los Andes and Chilean National Energy Commission.
Regulación para un mercado de servicios complementarios en la industria eléctrica chilena [Ancillary Services in the Chilean Electricity Market] (2017, with Alexander Galetovic and Cristián Muñoz).) Universidad de los Andes.
Optimization-based method for scenario reduction in generation expansion models. INFORMS Annual Meeting (2015, with Fernando de Sisternes)
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