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Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?

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  • Eirik S. Amundsen
  • Lars Bergman

Abstract

The integration of the power markets in Norway and Sweden in 1996 significantly constrained the major power companies’ ability to exercise market power within their national borders. In recent years, however, mergers and reciprocal acquisition of shares have reduced the number of independent players on the Norwegian-Swedish power market. The aim of this paper is to explore to what extent increasing cross-ownership among the major power companies in Norway and Sweden might re-establish the market power that was lost when the two national power markets were integrated. The analysis is based on a numerical model, assuming Cournot quantity setting behavior, of the Norwegian-Swedish power market. The simulation results suggest that partial ownership relations between generators tend to increase horizontal market power and thus the market price of electricity.

Suggested Citation

  • Eirik S. Amundsen & Lars Bergman, 2002. "Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?," The Energy Journal, , vol. 23(2), pages 73-95, April.
    • Handle: RePEc:sae:enejou:v:23:y:2002:i:2:p:73-95
    DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No2-3
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    References listed on IDEAS

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    1. Bergman, Lars & Andersson, Bo, 1995. "Market Structure and the Price of Electricity: An ex ante Analysis of the deregulated Swedish Electricity Market," SSE/EFI Working Paper Series in Economics and Finance 47, Stockholm School of Economics.
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    Cited by:

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    2. Li, Zhenghui & Chen, Bin & Lu, Siting & Liao, Gaoke, 2024. "The impact of financial institutions' cross-shareholdings on risk-taking," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1526-1544.

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