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Vertical separation vs. independent downstream entry in the Spanish electricity network: An experimental approach

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Abstract

We present experimental results from a series of sessions organized using the Power Market simulator; a software designed to realistically replicate the Spanish Electricity Market. In the experiments reported here we compare the status quo to two alternative treatments which represent alternative market structures. In one of them, labeled as vertical separation, we assume that power generating firms and electricity distributors-endsuppliers belong to separate business groups. In the second, we study the effect of entry by independent end-suppliers. Both alternative scenarios dominate the status quo in terms of market efficiency, whereas the latter of them dominates the former.

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  • Nikolaos Georgantzis & Enrique Fatas & Carlos Gutierrez-Hita & Aitor Ciarreta, 2007. "Vertical separation vs. independent downstream entry in the Spanish electricity network: An experimental approach," Working Papers 07-31, NET Institute, revised Sep 2007.
  • Handle: RePEc:net:wpaper:0731
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    File URL: http://www.netinst.org/Georgantzis_07-31.pdf
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    1. Ciarreta, Aitor & Gutierrez-Hita, Carlos, 2006. "Supply function vs. quantity competition in supergames," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 773-783, July.
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    Keywords

    Experimental economics; Spanish Electricity Market; vertical relations.;

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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