- Companies hold excess capital reserves against uncertainty.
- Investors become reluctant to commit to new projects.
- Underwriters see the risks in lending.
Producers, consumers and their intermediaries can efficiently allocate resources, facilitate the accumulation of capital and the production of goods and services.
(Expected demand is greater than expected supply) Capital flows into the market to add generation capacity to take advantage of strong margins.
(Expected supply is greater than expected demand) Capital flows into the market to add manufacturing capacity to consume favorably priced electricity.