Oligopolistic Competition in the Japanese Wholesale Electricity Market: A Linear Complementarity Approach
AbstractUsing a linear complementarity approach, we simulate the Japanese wholesale electricity market as a transmission-constrained Cournot market. Following Hobbs (2001), our model adopts the Cournot assumption in the energy market and the Bertrand assumption in the transmission market. The Bertrand assumption means that generators consider transmission charges as being exogenous, which can be interpreted as a kind of bounded rationality. We then present a simulation analysis of the Japanese wholesale electricity market, considering eight areas linked by interconnection transmission lines. Specifically, this paper examines the potential effects of both investment in interconnection transmission lines and the divestiture of dominant players' power plants.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 07023.
Length: 32 pages
Date of creation: Apr 2007
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-21 (All new papers)
- NEP-COM-2007-04-21 (Industrial Competition)
- NEP-ENE-2007-04-21 (Energy Economics)
- NEP-IND-2007-04-21 (Industrial Organization)
- NEP-MIC-2007-04-21 (Microeconomics)
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- HASUIKE Katsuhito & KANEMOTO Yoshitsugu, 2005. "Policy Evaluation for Oligopolistic Markets - A Case of Wholesale Electricity Market - (Japanese)," Discussion Papers (Japanese) 05024, Research Institute of Economy, Trade and Industry (RIETI).
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- Shu-ichi Akiyama & Nobuhiro Hosoe, 2006. "A Spatial Equilibrium Analysis of Transmission Charge Reform in Japan's Electric Power Industry," Discussion papers 06022, Research Institute of Economy, Trade and Industry (RIETI).
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- Borenstein, Severin & Bushnell, James & Kahn, Edward & Stoft, Steven, 1995. "Market power in California electricity markets," Utilities Policy, Elsevier, vol. 5(3-4), pages 219-236.
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