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Market Power in the Spanish Electricity Auction

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  • Ciarreta Antuñano, Aitor
  • Espinosa Alejos, María Paz

Abstract

We use hourly bid data from the Spanish day-ahead electricity auction to obtain a lower bound measure of generators' market power. Our method is not based on cost estimates but rather on the different behavior of strategic generators as compared to the behavior of more competitive producers. The results indicate that, despite the price cap effect of regulation in this market, the larger operators in the day-ahead market are able to increase prices above the competitive benchmark by a significant amount.

Suggested Citation

  • Ciarreta Antuñano, Aitor & Espinosa Alejos, María Paz, 2005. "Market Power in the Spanish Electricity Auction," DFAEII Working Papers 1988-088X, University of the Basque Country - Department of Foundations of Economic Analysis II.
    • Handle: RePEc:ehu:dfaeii:6747
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    References listed on IDEAS

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    More about this item

    Keywords

    market power; electricity market;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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