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Evaluation of Monopoly Neighborhood and its Relation with Monopoly Power: Case Study of Iran’s Electricity Market

Author

Listed:
  • Mamipour, Siab

    () (Assistant Professor of Economics, University of Kharazmi, Tehran, Iran)

  • Zeinali, Marziyeh

    () (MA Student in Economics, University of Kharazmi, Tehran, Iran)

  • Heydari, Kioumars

    () (Ph.D. in Energy Economics, Ministry of Energy, Tehran, Iran)

Abstract

More than three decades passes from start of a procedure called structure renewal in electricity industry of different countries. Moving to the competitive prices instead of adjusted rates has enabled some institutions to increase prices and experience market power. This issue can significantly endanger benefits caused by releases for consumers. Various indexes is presented for measurement of capability of applying market power up to now but issue of differentiation of electricity from other products due to its features is not considered in any of these indexes. As we Know, Iran has formed in the electricity market since 2003, and important structural changes have occurred in the electricity market. In this regard, this study by introducing a new index in market power (monopoly neighborhood index) tries to evaluate level of potential of monopoly power with regard to some features of electricity market for seventeen powerhouses in period of 2012 in Iran. In order to testing competence of this index in comparison to other indexes which are available for measuring potential of monopoly power, correlation of results obtained from each of indexes are investigated with increase of market price toward base competitive level. Results show that monopoly neighborhood index has more competence in comparison to the other structural indexes in estimation of potential of monopoly power in Iran's electricity market.

Suggested Citation

  • Mamipour, Siab & Zeinali, Marziyeh & Heydari, Kioumars, 2016. "Evaluation of Monopoly Neighborhood and its Relation with Monopoly Power: Case Study of Iran’s Electricity Market," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 3(1), pages 29-58, June.
  • Handle: RePEc:ris:qjatoe:0033
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    More about this item

    Keywords

    Market power; Monopoly neighborhood index; Lerner index; Electricity market;

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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