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The impact of regulation on pricing behavior in the Spanish electricity market (2002–2005)

Aitor Ciarreta Antuñano () and Maria Paz Espinosa ()

Energy Economics, 2012, vol. 34, issue 6, 2039-2045

Abstract: In this paper we measure the impact of regulatory measures which affected the Spanish electricity wholesale market between 2002 and 2005. Our approach is based on the fact that regulation changes incentives for firms and therefore their market behavior. In the absence of any regulation, firms would choose profit-maximizing prices on their residual demands so that the observed gap between optimal and actual prices provides a measure of the effect of regulation. Our results indicate that regulation has decreased wholesale prices considerably, but became less effective at the end of the sample period which explains the regulatory regime change introduced in 2006.

Keywords: Electricity markets; Market power; Regulation (search for similar items in EconPapers)
JEL-codes: L94 C61 D43 (search for similar items in EconPapers)
Date: 2012
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