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Finding Market Power in Electric Power Markets

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  • John Morris

Abstract

As part of the regulatory review of electric utility mergers in the United States, the Federal Energy Regulatory Commission requires utilities to submit market power studies. The Commission has specified a detailed method for calculating market concentration in these studies.This paper shows that one can simulate the actual price effects from the merger by using similar data and models. Using the merger between Union Electric and Central Illinois Public Service Company as an example, this paper demonstrates that the Commission's method is unsound and often identifies competitive problems that are not likely to exist.

Suggested Citation

  • John Morris, 2000. "Finding Market Power in Electric Power Markets," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(2), pages 167-178.
    • Handle: RePEc:taf:ijecbs:v:7:y:2000:i:2:p:167-178
    DOI: 10.1080/13571510050084514
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    References listed on IDEAS

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    1. Severin Borenstein & James Bushnell, 1999. "An Empirical Analysis of the Potential for Market Power in California’s Electricity Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(3), pages 285-323, September.
    2. Bolle, Friedel, 1992. "Supply function equilibria and the danger of tacit collusion : The case of spot markets for electricity," Energy Economics, Elsevier, vol. 14(2), pages 94-102, April.
    3. Green, Richard J & Newbery, David M, 1992. "Competition in the British Electricity Spot Market," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 929-953, October.
    4. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-1277, November.
    5. Aleksandr Rudkevich & Max Duckworth & Richard Rosen, 1998. "Modeling Electricity Pricing in a Deregulated Generation Industry: The Potential for Oligopoly Pricing in a Poolco," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 19-48.
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    Cited by:

    1. David P. Brown & Andrew Eckert, 2018. "Analyzing the Impact of Electricity Market Structure Changes and Mergers: The Importance of Forward Commitments," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(1), pages 101-137, February.
    2. repec:dau:papers:123456789/206 is not listed on IDEAS

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