Competition and Prices on the Emerging Nordic Electricity Market
AbstractThe purpose of this paper is to quantitatively evaluate the impact on electricity prices of deregulation and free trade in the Nordic countries. The analysis is focused on the impact of increased competition on market power and the degree of monopolistic pricing. The major tool for our analysis of electricity trade and prices is a numerical multicountry electricity market model in which losses and bottlenecks in the transmission system are taken into account. Moreover both Cournot and perfect competition equilibria with and without free trade in electricity can be simulated. According to the simulation results there are significant differences between the Cournot and perfect competition equilibrium prices under autarky. When inter-country trade is allowed, however, the Cournot equilibrium prices are quite close to the equilibrium prices under perfect competition. Yet the net inter-country physical flows of electricity are small and well within existing transmission capacities.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 217.
Length: 11 pages
Date of creation: 21 Jan 1998
Date of revision:
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Oligopoly; deregulation; electricity; trade;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- 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
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