The impact of regulation on pricing behavior in the Spanish electricity market (2002–2005)
AbstractIn this paper we measure the impact of regulatory measures which affected the Spanish electricity wholesale market between 2002 and 2005. Our approach is based on the fact that regulation changes incentives for firms and therefore their market behavior. In the absence of any regulation, firms would choose profit-maximizing prices on their residual demands so that the observed gap between optimal and actual prices provides a measure of the effect of regulation. Our results indicate that regulation has decreased wholesale prices considerably, but became less effective at the end of the sample period which explains the regulatory regime change introduced in 2006.
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Bibliographic InfoArticle provided by Elsevier in its journal Energy Economics.
Volume (Year): 34 (2012)
Issue (Month): 6 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/eneco
Electricity markets; Market power; Regulation;
Find related papers by JEL classification:
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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