Predicting Market Power in Wholesale Electricity Markets
The traditional measure of market power is the HHI, which gives implausible results given the low elasticity of demand in electricity spot markets, unless it is adapted to take account of contracting. In its place the Residual Supply Index has been proposed as a more suitable index to measure potential market power in electricity markets, notably in California and more recently in the EU Sector Inquiry. The paper investigates its value in identifying the ability of firms to raise prices in an electricity market with contracts and capacity constraints and find that it is most useful for the case of a single dominant supplier, or with a natural extension, for the case of a symmetric oligoply. Estimates from the Sector Inquiry seem to fit this case better than might be expected, but suggests an alternative defintion of the RSI defined over flexible output that should give a more reliable relationship.
|Date of creation:||02 Feb 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Convento, Via delle Fontanelle, 19, 50014 San Domenico di Fiesole (FI) Italy|
Web page: http://www.eui.eu/RSCAS/
More information through EDIRC
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.:
- David Kreps & Robert Wilson, 1998.
Levine's Working Paper Archive
237, David K. Levine.
- Allaz Blaise & Vila Jean-Luc, 1993. "Cournot Competition, Forward Markets and Efficiency," Journal of Economic Theory, Elsevier, vol. 59(1), pages 1-16, February.
- Giovanni Facchini & Anna Maria Mayda & Prachi Mishra, 2009.
"Do Interest Groups affect US Immigration Policy?,"
CReAM Discussion Paper Series
0904, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- Facchini, Giovanni & Mayda, Anna Maria & Mishra, Prachi, 2008. "Do Interest Groups Affect US Immigration Policy?," CEPR Discussion Papers 6898, C.E.P.R. Discussion Papers.
- Giovanni Facchini & Anna Maria Mayda & Prachi Mishra, 2008. "Do Interest Groups Affects US Immigration Policy?," Development Working Papers 256, Centro Studi Luca d'Agliano, University of Milano.
- Prachi Mishra & Giovanni Facchini & Anna Maria Mayda, 2008. "Do Interest Groups Affect U.S. Immigration Policy?," IMF Working Papers 08/244, International Monetary Fund.
- Lawrence E. Blume, 2003.
"Stigma and Social Control,"
Game Theory and Information
- Blaise Allaz & Jean-Luc Vila, 1993. "Cournot Competition, Forward Markets and Efficiency," Post-Print hal-00511806, HAL.
When requesting a correction, please mention this item's handle: RePEc:rsc:rsceui:2009/03. 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: (RSCAS web unit)
If references are entirely missing, you can add them using this form.