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An Examination of Frank Wolak’s Model of Market Power and its Application to the New Zealand Electricity Market

Author

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  • Lewis Evans
  • Graeme Guthrie

Abstract

This paper is the second in a symposium of papers that examine the 2009 report by Frank Wolak into the New Zealand electricity market. In this paper, we discuss the Report’s measures of the ability and incentives of generators to exercise unilateral market power. We show that the construction and interpretation of these measures are highly sensitive to some key assumptions, particularly those concerning the elasticity of demand for electricity in the wholesale market and the amount of transmission loss on the national grid.

Suggested Citation

  • Lewis Evans & Graeme Guthrie, 2011. "An Examination of Frank Wolak’s Model of Market Power and its Application to the New Zealand Electricity Market," Working Papers in Economics 11/10, University of Canterbury, Department of Economics and Finance.
  • Handle: RePEc:cbt:econwp:11/10
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    File URL: http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/1110.pdf
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    References listed on IDEAS

    as
    1. Shaun D. MCRAE & Frank A. WOLAK, 2009. "How Do Firms Exercise Unilateral Market Power? Evidence from a Bid-Based Wholesale Electricity Market," RSCAS Working Papers 2009/36, European University Institute.
    2. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Electricity markets; market power;

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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