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Competition effects of mergers: An event study of the German electricity market

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  • Keller, Andreas

Abstract

This paper investigates the competition effects of the entry of Vattenfall into the German electricity market. While the competition authorities supported the entry by approving Vattenfall's acquisition of three regional utilities, other market participants raised concerns over the emergence of an upcoming oligopoly in the German market for power generation. We contrast the efficiency hypothesis postulating pro-competitive effects of mergers with the market power hypothesis postulating anti-competitive effects. For the analysis of the two opposing hypotheses, we use an event study approach to the stock prices of Vattenfall's competitors in the German market. While we find no empirical evidence for increased market power in the German electricity market due to Vattenfall's mergers, there is some indication for efficiency increases. We therefore cannot oppose the view of the competition authorities predicting an overall positive effect for consumers as a result of Vattenfall's entry into the German electricity market.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 9 (September)
Pages: 5264-5271

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Handle: RePEc:eee:enepol:v:38:y:2010:i:9:p:5264-5271

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Electricity market Event study Horizontal merger;

References

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  1. Brunekreeft, Gert & Keller, Katja, 2000. "The electricity supply industry in Germany: market power or power of the market?," Utilities Policy, Elsevier, vol. 9(1), pages 15-29, March.
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Cited by:
  1. Mulder, Machiel & Schoonbeek, Lambert, 2013. "Decomposing changes in competition in the Dutch electricity market through the residual supply index," Energy Economics, Elsevier, vol. 39(C), pages 100-107.
  2. Kamiński, Jacek, 2014. "A blocked takeover in the Polish power sector: A model-based analysis," Energy Policy, Elsevier, vol. 66(C), pages 42-52.
  3. Pompei, Fabrizio, 2013. "Heterogeneous effects of regulation on the efficiency of the electricity industry across European Union countries," Energy Economics, Elsevier, vol. 40(C), pages 569-585.

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