Cournot Competition in Wholesale Electricity Markets: The Nordic Power Exchange, Nord Pool

Erik Lundin and Thomas Tangerås ()

No 1191, Working Paper Series from Research Institute of Industrial Economics

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 markups 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 2011–2013. Results suggest that mark-ups were 8–11 percent. We find some support for the hypothesis that the division of Sweden into price areas in 2011 increased the exercise of market power.

Keywords: Cournot competition; Market design; Market performance; Nord Pool; Walrasian auction; Wholesale electricity market (search for similar items in EconPapers)
JEL-codes: D22 D40 D43 D44 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2017-11-21
New Economics Papers: this item is included in nep-com, nep-ene, nep-eur, nep-gth, nep-ind and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.ifn.se/wfiles/wp/wp1191.pdf (application/pdf)

Related works:
Journal Article: Cournot competition in wholesale electricity markets: The Nordic power exchange, Nord Pool (2020)
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:hhs:iuiwop:1191

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Gustafsson ().