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Retail power market competition with endogenous entry decision—An auction data analysis

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  • Hosoe, Nobuhiro
  • Takagi, Shingo

Abstract

Deregulation 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 0.48yen/kWh on average when two or more providers bid at an auction.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jjieco:v:26:y:2012:i:3:p:351-368
    DOI: 10.1016/j.jjie.2012.05.002
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    Cited by:

    1. Nakajima, Tadahiro, 2013. "Inefficient and opaque price formation in the Japan Electric Power Exchange," Energy Policy, Elsevier, vol. 55(C), pages 329-334.
    2. Shigeharu Okajima & Hiroko Okajima, 2016. "Impact of environmental regulation and the 2011 earthquake on the Japanese electricity industry," Journal of Regulatory Economics, Springer, vol. 49(2), pages 223-249, April.

    More about this item

    Keywords

    Electric power industry; Auction data; Public procurement; Sample selection bias;

    JEL classification:

    • 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

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