Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Impact of Regulation on Pricing Behavior in the Spanish Electricity Market

Contents:

Author Info

  • Espinosa Alejos, María Paz
  • Ciarreta Antuñano, Aitor

Abstract

In this paper we measure the impact of regulatory measures which affected the Spanish electricity wholesale market in the period 2002-2005. Our approach is based on the fact that regulation changes firms' incentives 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 change of regulatory regime introduced in 2006.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: https://addi.ehu.es/bitstream/10810/6470/1/wp2010-08.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of the Basque Country - Department of Foundations of Economic Analysis II in its series DFAEII Working Papers with number 2010-08.

as in new window
Length:
Date of creation: Jun 2010
Date of revision:
Handle: RePEc:ehu:dfaeii:201008

Contact details of provider:
Postal: Avenida Lehendakari Aguirre, 83, 48015 Bilbao
Phone: 34-946013774
Fax: 34-946017123
Web page: http://www.dfaeii.ehu.es
More information through EDIRC

Order Information:
Postal: Dpto. de Fundamentos del Análisis Económico II, = Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
Email:

Related research

Keywords: regulation; pricing; electricity market;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, American Economic Association, vol. 92(5), pages 1376-1405, December.
  2. von der Fehr, Nils-Henrik Morch & Harbord, David, 1993. "Spot Market Competition in the UK Electricity Industry," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 103(418), pages 531-46, May.
  3. Kai-Uwe Kühn & Matilde Machado, 2004. "Bilateral Market Power And Vertical Integration In The Spanish Electricity Spot Market," Working Papers, CEMFI wp2004_0414, CEMFI.
  4. Tamaschke, R. & Docwra, G. & Stillman, R., 2005. "Measuring market power in electricity generation: A long-term perspective using a programming model," Energy Economics, Elsevier, Elsevier, vol. 27(2), pages 317-335, March.
  5. Juan Toro & Natalia Fabra, 2002. "Price Wars and Collusion in the Spanish Electricity Market," Economics Series Working Papers, University of Oxford, Department of Economics 136, University of Oxford, Department of Economics.
  6. Furió, Dolores & Lucia, Julio J., 2009. "Congestion management rules and trading strategies in the Spanish electricity market," Energy Economics, Elsevier, Elsevier, vol. 31(1), pages 48-60, January.
  7. Green, Richard, 1999. "The Electricity Contract Market in England and Wales," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 47(1), pages 107-24, March.
  8. Espinosa Alejos, María Paz & Ciarreta Antuñano, Aitor, 2004. "Market Power in the Spanish Electricity Auction," DFAEII Working Papers 2005-04, University of the Basque Country - Department of Foundations of Economic Analysis II.
  9. Espinosa Alejos, María Paz & Ciarreta Antuñano, Aitor, 2005. "A Supply Function Competition Model for the Spanish Wholesale Electricity Market," DFAEII Working Papers 2005-18, University of the Basque Country - Department of Foundations of Economic Analysis II.
  10. Frank A. Wolak, 2003. "Measuring Unilateral Market Power in Wholesale Electricity Markets: The California Market, 1998–2000," American Economic Review, American Economic Association, American Economic Association, vol. 93(2), pages 425-430, May.
  11. Crampes , C. & Fabra , N., 2005. "The Spanish Electricity Industry: Plus ça change …," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0502, Faculty of Economics, University of Cambridge.
  12. Allaz Blaise & Vila Jean-Luc, 1993. "Cournot Competition, Forward Markets and Efficiency," Journal of Economic Theory, Elsevier, Elsevier, vol. 59(1), pages 1-16, February.
  13. Vitor Marques & Isabel Soares & Adelino Fortunato, 2008. "Measuring market power in the Iberian electricity wholesale market through the residual demand curve," CEF.UP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 0801, Universidade do Porto, Faculdade de Economia do Porto.
  14. Natalia Fabra, 2003. "Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 51(3), pages 271-293, 09.
  15. Ali Hortaçsu & Steven L. Puller, 2008. "Understanding strategic bidding in multi-unit auctions: a case study of the Texas electricity spot market," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 39(1), pages 86-114.
  16. Catherine D. Wolfram, 1999. "Measuring Duopoly Power in the British Electricity Spot Market," American Economic Review, American Economic Association, American Economic Association, vol. 89(4), pages 805-826, September.
  17. Ciarreta, Aitor & Gutierrez-Hita, Carlos, 2006. "Supply function vs. quantity competition in supergames," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 24(4), pages 773-783, July.
  18. Green, Richard J, 1996. "Increasing Competition in the British Electricity Spot Market," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 44(2), pages 205-16, June.
  19. Frank Wolak, 2000. "An Empirical Analysis of the Impact of Hedge Contracts on Bidding Behavior in a Competitive Electricity Market," International Economic Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(2), pages 1-39.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Shawkat Hammoudeh & Amine Lahiani & Duc Khuong Nguyen & Ricardo M. Sousa, 2014. "Asymmetric and nonlinear passthrough of energy prices to CO2 emission allowance prices," Working Papers, Department of Research, Ipag Business School 2014-082, Department of Research, Ipag Business School.
  2. Moutinho, Victor & Moreira, António C. & Mota, Jorge, 2014. "Do regulatory mechanisms promote competition and mitigate market power? Evidence from Spanish electricity market," Energy Policy, Elsevier, Elsevier, vol. 68(C), pages 403-412.
  3. Shawkat Hammoudeh & Duc Khuong Nguyen & Ricardo M. Sousa, 2014. "What explains the short-term dynamics of the prices of CO2 emissions?," Working Papers, Department of Research, Ipag Business School 2014-081, Department of Research, Ipag Business School.
  4. Espinosa Alejos, María Paz, 2013. "Understanding Tariff Deficit and its Challenges," DFAEII Working Papers DFAEII;2013-01, University of the Basque Country - Department of Foundations of Economic Analysis II.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ehu:dfaeii:201008. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alcira Macías Redondo).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.