A Critique of Wolak’s Evaluation of the NZ Electricity Market: The Incentive to Exercise Market Power with Elastic Demand and Transmission Loss
AbstractThis paper is the second in a symposium of papers that examine the 2009 report by Frank Wolak into the New Zealand electricity market. In this paper, we discuss the Report’s measures of the ability and incentives of generators to exercise unilateral market power. We show that the construction and interpretation of these measures are highly sensitive to some key assumptions, particularly those concerning the elasticity of demand for electricity in the wholesale market and the amount of transmission loss on the national grid.
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Bibliographic InfoPaper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 11/09.
Length: 20 pages
Date of creation: 01 Jan 2011
Date of revision:
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Wolak Report; electricity markets; market power;
Other versions of this item:
- Seamus Hogan & Peter Jackson, 2012. "A critique of Wolak's evaluation of the NZ electricity market: The incentive to exercise market power with elastic demand and transmission loss," New Zealand Economic Papers, Taylor & Francis Journals, vol. 46(1), pages 11-23, November.
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-05 (All new papers)
- NEP-ENE-2011-02-05 (Energy Economics)
- NEP-IND-2011-02-05 (Industrial Organization)
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