Application of a structural model to a wholesale electricity market: The Spanish market from January 1999 to June 2007

Vítor Marques, Adelino Fortunato () and Isabel Soares ()
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Vítor Marques: Entidade Reguladora dos Serviços Energéticos
Adelino Fortunato: University of Coimbra
Isabel Soares: University of Oporto

No 2011-02, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra

Abstract: The aim of this work is to analyse the agents’ behaviour in highly concentrated and strongly regulated electricity wholesale markets with rigid demand. In order to accomplish this aim, the analysis was based on the former Spanish electricity generation market, between January 1999 and June 2007, before the MIBEL (Iberian Electricity Market) has started. The analysis is carried out in the theoretical framework of the structural models. The result of the structural model supports the apparently competitive nature of the market analysed for the period 1999 to 2003, despite than fact that the Lerner index average was high during this period. It will therefore be important in future work to analyse whether the high average mark-up verified accords with the CTCs (stranded costs compensation which have the characteristics of contracts for difference) which frame the activities of the electricity producers.

Keywords: electricity market; rigid demand; structural model; market power (search for similar items in EconPapers)
JEL-codes: L13 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2011-01
New Economics Papers: this item is included in nep-ene
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