Market Power and Power Markets

Jürgen Weiss ()
Additional contact information
Jürgen Weiss: 22 Burnside Avenue, Somerville, Massachusetts 02144

Interfaces, 2002, vol. 32, issue 5, 37-46

Abstract: Market power is a prominent issue in the current debate about electricity industry restructuring. Market experiments I conducted with industry subjects via the Internet show the impact of seller concentration, demand-side bidding, and transmission constraints on competition in simulated electricity markets. Realistic modeling of the transmission grid revealed opportunities to exercise market power not found in simpler experimental designs. In particular, increasing the number of sellers in a market did not necessarily reduce market power as standard theory suggests. Rather, locational advantages allowed some players to maintain profits near monopoly levels even when seller concentration was at levels generally considered competitive. The implication is that divestiture of existing local monopolies may not be enough to make electricity markets competitive. I confirm the positive impact of demand-side bidding on competition.

Keywords: Government: energy policies; Games/group decisions: bidding/auctions (search for similar items in EconPapers)
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://dx.doi.org/10.1287/inte.32.5.37.74 (application/pdf)

Related works:
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:inm:orinte:v:32:y:2002:i:5:p:37-46

Access Statistics for this article

More articles in Interfaces from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().