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Market Structure and the Price of Electricity: An ex ante Analysis of the deregulated Swedish Electricity Market

Author

Listed:
  • Bergman, Lars

    () (Dept. of Economics, Stockholm School of Economics)

  • Andersson, Bo

    (Dept. of Economics, Stockholm School of Economics)

Abstract

Following new legislation the Swedish electricity market is about to be deregulated. The new system is designed to ensure competition in production and supply. The Swedish electricity market is characterised by a high degree of concentration on the seller side. In this paper we use a simple numerical model to explore the relation between the Cournot-equilibrium price and the number of firms and the size distribution of firms on the market. We show that given the current structure of firms on the supply side of the Swedish electricity market, deregulation is not a sufficient condition for equilibrium prices close to marginal costs.

Suggested Citation

  • 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.
  • Handle: RePEc:hhs:hastef:0047
    as

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    More about this item

    Keywords

    Oligopoly; Nash-Cournot; deregulation; electricity;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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