Measuring the Simultaneous Quantity Game in OMEL Spot Electricity Market

Victor Moutinho, Ant nio Carrizo Moreira and Jorge H. Mota
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Victor Moutinho: DEGEI, University of Aveiro and CEFAGE, University of vora, Portugal.
Ant nio Carrizo Moreira: Department of Economics, Management and Industrial Engineering, University of Aveiro, Portugal.
Jorge H. Mota: DEGEI, University of Aveiro, Portugal.

International Journal of Energy Economics and Policy, 2015, vol. 5, issue 1, 305-320

Abstract: In the electricity spot market the various competitive levels, as well as their subsequent changes in the market equilibrium, are justified by the simultaneous quantity game between electricity generators. It is expected that the dominant market players employ differentiated strategic behaviours, thus, permitting the quantification of such differentiated effects on the use of market power. The various competitive levels, as well as their subsequent changes in the market equilibrium, are justified by the simultaneous quantity game. The results show that the quantities purchased in the spot market for sale in open market influence prices, i.e., when there is an imbalance in the estimated long-term relationship, prices themselves move in order to recover the state of equilibrium, which reveals that, in the long-term, the OMEL Price is weakly exogenous to the cointegration vector, whereas quantities purchased for sale in open market move towards the reestablishment of the long-term equilibrium.

Keywords: Market Conduct; Collusion; Electricity Spot Market; Market power (search for similar items in EconPapers)
JEL-codes: D43 L11 (search for similar items in EconPapers)
Date: 2015
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