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Simulating market power in the New Zealand electricity market


  • Oliver Browne
  • Stephen Poletti
  • David Young


The recent Wolak report on the New Zealand electricity market found evidence of substantial market power. The report, an empirical one, was heavily criticised on several aspects of its methodology. We investigate market power in the New Zealand Electricity Market during 2006 and 2008 using an alternative methodology; a computer agent-based model. With this model, we can account for all the substantive criticisms of the Wolak report. Our results are broadly in line with those of Wolak, nonetheless there are significant differences. In particular, our allocation of market rents across periods is very different. We estimate total market rents for 2006 and 2008 to be $2.6 billion.

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  • Oliver Browne & Stephen Poletti & David Young, 2012. "Simulating market power in the New Zealand electricity market," New Zealand Economic Papers, Taylor & Francis Journals, vol. 46(1), pages 35-50, December.
  • Handle: RePEc:taf:nzecpp:v:46:y:2012:i:1:p:35-50 DOI: 10.1080/00779954.2011.649566

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    References listed on IDEAS

    1. Lewis Evans & Graeme Guthrie, 2009. "How Options Provided by Storage Affect Electricity Prices," Southern Economic Journal, Southern Economic Association, vol. 75(3), pages 681-702, January.
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    Cited by:

    1. Lewis Evans & Seamus Hogan & Peter Jackson, 2012. "A critique of Wolak's evaluation of the NZ electricity market: Introduction and overview," New Zealand Economic Papers, Taylor & Francis Journals, vol. 46(1), pages 1-10, November.
    2. Bunn, Derek & Yusupov, Tim, 2015. "The progressive inefficiency of replacing renewable obligation certificates with contracts-for-differences in the UK electricity market," Energy Policy, Elsevier, vol. 82(C), pages 298-309.

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