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Quantifying Market Power In The German Wholesale Electricity Market Using A Dynamic Multi‐Regional Dispatch Model

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  • FELIX MÜSGENS

Abstract

This paper quantifies the degree of market power in the German wholesale electricity market. A dispatch model simulates competitive marginal costs. In addition to common input factors like plant capacities, fuel prices and load structures, the model also incorporates international power exchange and dynamic effects like start‐up costs and hydro storage plant dispatch. The simulated prices are subsequently used as a benchmark for observed electricity prices. The analysis reveals significant market power in the German electricity market, mainly exhibited during peak periods. Producer surplus is also increased significantly due to strategic behavior.

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  • Felix Müsgens, 2006. "Quantifying Market Power In The German Wholesale Electricity Market Using A Dynamic Multi‐Regional Dispatch Model," Journal of Industrial Economics, Wiley Blackwell, vol. 54(4), pages 471-498, December.
    • Handle: RePEc:bla:jindec:v:54:y:2006:i:4:p:471-498
    DOI: 10.1111/j.1467-6451.2006.00297.x
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    Cited by:

    1. Machiel Mulder & Marcel Vermeulen & Meinoud Hehenkamp, 2007. "Monitor Energy Markets 2007 - Analysis of developments on the Dutch wholesale markets for gas and electricity," Market monitor energy 07, Department of Energy, Netherlands Competition Authority.
    2. Weigt, Hannes & Hirschhausen, Christian von, 2008. "Price formation and market power in the German wholesale electricity market in 2006," Energy Policy, Elsevier, vol. 36(11), pages 4227-4234, November.
    3. Janssen, Matthias & Wobben, Magnus, 2008. "Electricity pricing and market power: Evidence from Germany," CAWM Discussion Papers 9, University of Münster, Münster Center for Economic Policy (MEP).
    4. Egil Ferkingstad & Anders L{o}land & Mathilde Wilhelmsen, 2011. "Causal modeling and inference for electricity markets," Papers 1110.5429, arXiv.org.
    5. Marcel Vermeulen & Simon Bremer & Vera Barfi Masihi, 2009. "The Dutch Energy Markets in 2009: Target Scenario – Obstacles – Measures," Market monitor energy 08, Department of Energy, Netherlands Competition Authority.
    6. Ferkingstad, Egil & Løland, Anders & Wilhelmsen, Mathilde, 2011. "Causal modeling and inference for electricity markets," Energy Economics, Elsevier, vol. 33(3), pages 404-412, May.
    7. Grant R. McDermott & Øivind A. Nilse, 2014. "Electricity Prices, River Temperatures, and Cooling Water Scarcity," Land Economics, University of Wisconsin Press, vol. 90(1), pages 131-148.
    8. Richter, Jan, 2011. "A Unique Competitive Equilibrium on Interdependent Spot Electricity and Reserve Capacity Markets," EWI Working Papers 2011-9, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    9. Paulus, Moritz & Trueby, Johannes & Growitsch, Christian, 2011. "Nations as Strategic Players in Global Commodity Markets: Evidence from World Coal Trade," EWI Working Papers 2011-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    10. Korbinian von Blanckenburg & Marc Hanfeld & Konstantin A. Kholodilin, 2013. "A Market Screening Model for Price Inconstancies: Empirical Evidence from German Electricity Markets," Discussion Papers of DIW Berlin 1274, DIW Berlin, German Institute for Economic Research.

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