An Analysis of Market Power Mitigation Strategies in Colorado's Electricity Industry
AbstractWe apply an algorithm that optimizes the generation dispatch for a dominant firm to Colorado's electricity market and show that the dominant electricity generation firm can strategically congest transmission into the region to receive a maximum price over 50% of the time. When it does not get the maximum price, the dominant firm still receives an average markup more than 10% over the competitive price. We use this model to show how mitigation strategies such as enhancing the transmission grid, divesting the dominant firm's generation assets, and promoting entry into the generation market can lower prices in a wholesale electricity generation industry by limiting a dominant firm's market power.
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Bibliographic InfoArticle provided by International Association for Energy Economics in its journal The Energy Journal.
Volume (Year): Volume22 (2001)
Issue (Month): Number 3 ()
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- F0 - International Economics - - General
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- Méritet, Sophie, 2003. "L'émergence de pouvoir de marché dans les marchés électriques : le cas des Etats-Unis," Economics Papers from University Paris Dauphine 123456789/206, Paris Dauphine University.
- Quick, David M. & Carey, Janis M., 2002. "Transmission capacity and market power: the effect on a dominant generation firm," Energy Policy, Elsevier, vol. 30(8), pages 699-708, June.
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