Retail Power Market Competition with Endogenous Entry Decision-An Auction Data Analysis
AbstractDeregulation in the electric power industry has been aimed at promoting competition and thereby enhancing the industry's efficiency. We use the auction data of public power procurements to study the impact of the reform on the retail power market in Japan. We quantify this impact by measuring a decline in power charges, controlling for the endogeneity bias caused by the entrants' bid-submission decisions. Our results suggest that power charges would decline by about 0.48 yen/kWh on average when two or more providers bid at an auction.
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Bibliographic InfoPaper provided by National Graduate Institute for Policy Studies in its series GRIPS Discussion Papers with number 11-01.
Length: 36 pages
Date of creation: Apr 2011
Date of revision:
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Web page: http://r-center.grips.ac.jp/DiscussionPapers
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electric power industry; auction data; public procurement; sample selection bias;
Other versions of this item:
- Hosoe, Nobuhiro & Takagi, Shingo, 2012. "Retail power market competition with endogenous entry decision—An auction data analysis," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 351-368.
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-07 (All new papers)
- NEP-IND-2011-05-07 (Industrial Organization)
- NEP-MST-2011-05-07 (Market Microstructure)
- NEP-REG-2011-05-07 (Regulation)
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