Market Structure and the Price of Electricity: An ex ante Analysis of the deregulated Swedish Electricity Market
AbstractFollowing new legislation the Swedish electricity market is about to be deregulated. The new system is designed to ensure competition in production and supply. The Swedish electricity market is characterised by a high degree of concentration on the seller side. In this paper we use a simple numerical model to explore the relation between the Cournot-equilibrium price and the number of firms and the size distribution of firms on the market. We show that given the current structure of firms on the supply side of the Swedish electricity market, deregulation is not a sufficient condition for equilibrium prices close to marginal costs.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 47.
Length: 15 pages
Date of creation: Feb 1995
Date of revision:
Publication status: Published in The Energy Journal, 1995, pages 97-109
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Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
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More information through EDIRC
Oligopoly; Nash-Cournot; deregulation; electricity;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
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