  We offer a parsimonious model to investigate how strategic wind producers
sell energy under stochastic production constraints, where the extent of
heterogeneity of wind energy availability varies according to wind farm
locations. The main insight of our analysis is that increasing heterogeneity in
resource availability improves social welfare, as a function of its effects
both on improving diversification and on reducing withholding by firms. We show
that this insight is quite robust for any concave and downward-sloping inverse
demand function. The model is also used to analyze the effect of heterogeneity
on firm profits and opportunities for collusion. Finally, we analyze the
impacts of improving public information and weather forecasting; enhanced
public forecasting increases welfare, but it is not always in the best
interests of strategic producers.
