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Competition and Prices on the Emerging Nordic Electricity Market

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Author Info

  • Amundsen, Eirik S.

    ()
    (Department of Economics)

  • Bergman, Lars

    ()
    (Dept. of Economics, Stockholm School of Economics)

  • Andersson, Bo

    (Dept. of Economics, Stockholm School of Economics)

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    Abstract

    The 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 Info

    Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 217.

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    Length: 11 pages
    Date of creation: 21 Jan 1998
    Date of revision:
    Handle: RePEc:hhs:hastef:0217

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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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    Related research

    Keywords: Oligopoly; deregulation; electricity; trade;

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    References

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    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.:
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    1. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
    2. Bergman, Lars & Andersson, Bo, 1995. "Market Structure and the Price of Electricity: An ex ante Analysis of the deregulated Swedish Electricity Market," Working Paper Series in Economics and Finance 47, Stockholm School of Economics.
    3. Bo Andersson & Lars Bergman, 1995. "Market Structure and the Price of Electricity: An Ex Ante Analysis of the Deregulated Swedish Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 97-110.
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    Cited by:
    1. Hjalmarsson, Erik, 2000. "Nord Pool: A Power Market Without Market Power," Working Papers in Economics 28, University of Gothenburg, Department of Economics.
    2. Hooper, E. & Medvedev, A., 2008. "Electrifying Integration: Electricity Production And The South-East Europe Regional Energy Market," Cambridge Working Papers in Economics 0804, Faculty of Economics, University of Cambridge.
    3. Kopsakangas-Savolainen, Maria, 2004. "The welfare effects of different pricing schemes for electricity distribution in Finland," Energy Policy, Elsevier, vol. 32(12), pages 1429-1435, August.
    4. Lundgren, Jens & Hellström, Jörgen & Rudholm, Niklas, 2008. "Multinational Electricity Market Integration and Electricity Price Dynamics," HUI Working Papers 16, HUI Research.

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