Price Wars and Collusion in the Spanish Electricity Market

Natalia Fabra and Juan Toro
Additional contact information
Juan Toro: Oxford University

Industrial Organization from University Library of Munich, Germany

Abstract: \We analyze the time-series of prices in the Spanish electricity market by means of a time varying-transition-probability Markov switching model. Accounting for changes in demand and cost conditions (which reflect changes in input costs, capacity availability and hydro power), we show that the time-series of prices is characterized by two significantly different price levels. Based on a Green and Porter (1984)'s type of model that introduces several institutional details, we construct trigger variables that affect the likelihood of starting a price war. By interpreting the signs of the triggers, we are able to infer some of the properties of the collusive strategy that firms might have followed. We obtain more empirical support to Green and Porter's model than previous studies. REVISED: January 2004

Keywords: Electricity Markets; Collusion; Markov Switching (search for similar items in EconPapers)
JEL-codes: C22 L13 L94 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2002-12-09, Revised 2004-01-26
New Economics Papers: this item is included in nep-com, nep-ene and nep-ind
Note: Type of Document - Tex; prepared on IBM PC -; to print on PostScript; pages: 27
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0212/0212001.pdf (application/pdf)

Related works:
Journal Article: Price wars and collusion in the Spanish electricity market (2005)
Working Paper: Price Wars and Collusion in the Spanish Electricity Market (2002)
Working Paper: Price Wars and Collusion in the Spanish Electricity Market (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpio:0212001

Access Statistics for this paper

More papers in Industrial Organization from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).