A Review of the Monitoring of Market Power The Possible Roles of TSOs in Monitoring for Market Power Issues in Congested Transmission Systems
The paper surveys the literature and publicly available information on market power monitoring in electricity wholesale markets. After briefly reviewing definitions, strategies and methods of mitigating market power we examine the various methods of detecting market power that have been employed by academics and market monitors/regulators. These techniques include structural and behavioural indices and analysis as well as various simulation approaches. The applications of these tools range from spot market mitigation and congestion management through to long-term market design assessment and merger decisions. Various market-power monitoring units already track market behaviour and produce indices. Our survey shows that these units collect a large amount of data from various market participants and we identify the crucial role of the transmission system operators with their access to dispatch and system information. Easily accessible and comprehensive data supports effective market power monitoring and facilitates market design evaluation. The discretion required for effective market monitoring is facilitated by institutional independence.
|Date of creation:||Jan 2005|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.econ.cam.ac.uk/index.htm|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shapiro, Carl, 1989. "Theories of oligopoly behavior," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 6, pages 329-414 Elsevier.
- Steven L. Puller, 2007. "Pricing and Firm Conduct in California's Deregulated Electricity Market," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 75-87, February.
- Green, Richard & Newbery, David M G, 1991.
"Competition in the British Electricity Spot Market,"
CEPR Discussion Papers
557, C.E.P.R. Discussion Papers.
- 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 929-53, October.
- Joanne Evans and Richard Green, 2005.
"Why Did British Electricity Prices Fall after 1998?,"
05-13, Department of Economics, University of Birmingham.
- Joanne Evans & Richard Green, 2003. "Why did British electricity prices fall after 1998?," Working Papers 0307, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Green, Richard J & Joanne Evans, 2003. "Why did British electricity prices fall after 1998?," Royal Economic Society Annual Conference 2003 92, Royal Economic Society.
- Evans, J. & Green, R., 2003. "Why did British Electricity Prices Fall after 1998?," Cambridge Working Papers in Economics 0326, Faculty of Economics, University of Cambridge.
- Severin Borenstein & James Bushnell, 1998.
"An Empirical Analysis of the Potential for Market Power in California's Electricity Industry,"
NBER Working Papers
6463, National Bureau of Economic Research, Inc.
- Borenstein, Severin & Bushnell, James, 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.
- Terry Robinson & Andrzej Baniak, 2002. "The volatility of prices in the English and Welsh electricity pool," Applied Economics, Taylor & Francis Journals, vol. 34(12), pages 1487-1495.
- Crespo, Joseph G. & Giacchino, Leonardo, 2003. "Improving Market Power Mitigation Rules for Peaking Units," The Electricity Journal, Elsevier, vol. 16(8), pages 47-60, October.
- Natalia Fabra & Juan Toro, 2003. "The Fall in British Electricity Prices: Market Rules, Market Structure, or Both?," Industrial Organization 0309001, EconWPA.
- Von der Fehr, N.H.M. & Harbord, D., 1992.
"Spot Market Competition in the UK Electricity Industry,"
09/1992, Oslo University, Department of Economics.
- von der Fehr, Nils-Henrik Morch & Harbord, David, 1993. "Spot Market Competition in the UK Electricity Industry," Economic Journal, Royal Economic Society, vol. 103(418), pages 531-46, May.
- Robert H. Patrick & Frank A. Wolak, 2001. "Estimating the Customer-Level Demand for Electricity Under Real-Time Market Prices," NBER Working Papers 8213, National Bureau of Economic Research, Inc.
- Neuhoff, Karsten & Barquin, Julian & Boots, Maroeska G. & Ehrenmann, Andreas & Hobbs, Benjamin F. & Rijkers, Fieke A.M. & Vazquez, Miguel, 2005. "Network-constrained Cournot models of liberalized electricity markets: the devil is in the details," Energy Economics, Elsevier, vol. 27(3), pages 495-525, May.
- Macatangay, Rafael Emmanuel A., 2001. "Market definition and dominant position abuse under the new electricity trading arrangements in England and Wales," Energy Policy, Elsevier, vol. 29(5), pages 337-340, April.
- repec:reg:rpubli:73 is not listed on IDEAS
- Paul L. Joskow, 2003.
"The Difficult Transition to Competitive Electricity Markets in the U.S,"
0308, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Joskow, P.L., 2003. "The Difficult Transition to Competitive Electricity Markets in the U.S," Cambridge Working Papers in Economics 0328, Faculty of Economics, University of Cambridge.
- Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-77, November.
- SMEERS, Yves, 1997. "Computable equilibrium models and the restructuring of the European electricity and gas markets," CORE Discussion Papers 1997061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- William W. Hogan, 1997. "A Market Power Model with Strategic Interaction in Electricity Networks," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 107-141.
- Richard Gilbert & Neuhoff, K. & Newbery, D., 2002. "Allocating Transmission to Mitigate Market Power in Electricity Networks," Cambridge Working Papers in Economics 0225, Faculty of Economics, University of Cambridge.
- Green, Richard J, 1996. "Increasing Competition in the British Electricity Spot Market," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 205-16, June.
- Fred S. McChesney & William F. Shughart & David D. Haddock, 2004. "On the Internal Contradictions of the Law of One Price," Economic Inquiry, Western Economic Association International, vol. 42(4), pages 706-716, October.
- Shmuel S. Oren, 1997. "Economic Inefficiency of Passive Transmission Rights in Congested Electricity Systems with Competitive Generation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 63-83.
- Scheffman, David T & Spiller, Pablo T, 1987. "Geographic Market Definition under the U.S. Department of Justice Merger Guidelines," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 123-47, April.
- Paul L. Joskow & Edward Kohn, 2002.
"A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000,"
The Energy Journal,
International Association for Energy Economics, vol. 0(Number 4), pages 1-35.
- Paul Joskow & Edward Kahn, 2001. "A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000," NBER Working Papers 8157, National Bureau of Economic Research, Inc.
- Joskow, P. & Edward Kahn, 2002. "A Quantitative Analysis of Pricing Behavior In California’s Wholesale Electricity Market During Summer 2000," Cambridge Working Papers in Economics 0211, Faculty of Economics, University of Cambridge.
- Guthrie, Graeme & Videbeck, Steen, 2003. "Approaches to Assessing Market Power in Electricity Markets," Working Paper Series 4137, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
- Yves Smeers, 1997. "Computable Equilibrium Models and the Restructuring of the European Electricity and Gas Markets," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-31.
- Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, vol. 92(5), pages 1376-1405, December.
- Cardell, Judith B. & Hitt, Carrie Cullen & Hogan, William W., 1997. "Market power and strategic interaction in electricity networks," Resource and Energy Economics, Elsevier, vol. 19(1-2), pages 109-137, March.
- Allaz Blaise & Vila Jean-Luc, 1993. "Cournot Competition, Forward Markets and Efficiency," Journal of Economic Theory, Elsevier, vol. 59(1), pages 1-16, February.
- Bushnell, James & Wolfram, Catherine, 2008. "Electricity Markets," Staff General Research Papers 31547, Iowa State University, Department of Economics.
- Froeb, L.M. & Werden, G.J., 1991. "Correlation, Causality, and all that Jazz: The Inherent Shortcomings of Price Tests for Antitrust Market Delineation," Papers 91-6, U.S. Department of Justice - Antitrust Division.
When requesting a correction, please mention this item's handle: RePEc:cam:camdae:0504. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jake Dyer)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.