Cournot competition in wholesale electricity markets: The Nordic power exchange, Nord Pool

Erik Lundin and Thomas Tangerås ()

International Journal of Industrial Organization, 2020, vol. 68, issue C

Abstract: Horizontal shifts in bid curves observed in wholesale electricity markets are consistent with Cournot competition. Quantity competition reduces the informational requirements associated with evaluating market performance because the price-cost margins of all producers then depend on the same inverse residual demand curve instead of one for each firm. We apply the model to the day-ahead market of the Nordic power exchange, Nord Pool, for the years 2011-13. We reject the null hypothesis of perfect competition in all specifications. Results suggest that the average price-cost margin across the sample period was around four percent.

Keywords: Cournot competition; Market design; Market performance; Nord Pool; Walrasian auction; Wholesale electricity market (search for similar items in EconPapers)
JEL-codes: D22 D43 D44 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Working Paper: Cournot Competition in Wholesale Electricity Markets: The Nordic Power Exchange, Nord Pool (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:68:y:2020:i:c:s0167718719300645

DOI: 10.1016/j.ijindorg.2019.102536

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