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Competition Issues in the Electricity Sector


  • OECD


Electricity markets are prone to the exercise of market power due to a combination of factors including: inelastic demand, lack of extensive practical storage of electricity, transmission congestion, transmission loop flows and capacity constraints coupled with diversity in the marginal costs of different types of generators. The level of market power can vary rapidly in time according to changes in transmission congestion and fluctuating load levels. Given the propensity of the electricity market to market power, horizontal structural separation (or divestiture) of the generation market is a key policy tool. Some structural separation has been carried out, but on a relatively limited scale. But congestion segments electricity markets and contributes to the exercise of generator market power. This effect can provide the incentive for building new generation capacity. So a balance must be found between providing an...

Suggested Citation

  • Oecd, 2005. "Competition Issues in the Electricity Sector," OECD Journal: Competition Law and Policy, OECD Publishing, vol. 6(4), pages 81-181.
  • Handle: RePEc:oec:dafkaa:5lgmkd5v8mzt

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    Cited by:

    1. Sandler, Danielle H., 2017. "Externalities of public housing: The effect of public housing demolitions on local crime," Regional Science and Urban Economics, Elsevier, vol. 62(C), pages 24-35.
    2. Tat'yana Kovaleva, 2012. "Identification of the leading branches in the economy of Perm territory as potential clusters," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 181-186.
    3. repec:oup:scippl:v:44:y:2017:i:5:p:707-721. is not listed on IDEAS
    4. Hesamzadeh, Mohammad R. & Biggar, Darryl R. & Hosseinzadeh, Nasser, 2011. "The TC-PSI indicator for forecasting the potential for market power in wholesale electricity markets," Energy Policy, Elsevier, vol. 39(10), pages 5988-5998, October.

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