Supply Function Competition in the Spanish Wholesale Electricity Market

Aitor Ciarreta and Maria Paz Espinosa

The Energy Journal, 2010, vol. 31, issue 4, 137-158

Abstract: We represent the Spanish wholesale market as a supply function competition model. Theoretically, the larger generators’ supply curves for each plant should be to the left of the supply curves of plants owned by smaller generators. We test this prediction for fuel plants using data from the Spanish Market Operator (OMEL) from January 2002 to December 2005. Our empirical results are consistent with the model predictions and suggest that the supply function model better fits data than a discrete-bid auction model since large generators behave as price-makers irrespective whether they are the marginal firms at the auction.

Keywords: Supply function; Competition; Electricity market (search for similar items in EconPapers)
Date: 2010
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Journal Article: Supply Function Competition in the Spanish Wholesale Electricity Market (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:31:y:2010:i:4:p:137-158

DOI: 10.5547/ISSN0195-6574-EJ-Vol31-No4-6

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