Nord Pool: A Power Market Without Market Power

Regulatory reform in the Nordic electricity-supply markets has resulted in a single integrated Nordic electricity market. This paper performs an econometric study of market power in the spot market of Nord Pool, the joint Nordic power exchange. I use a dynamic extension of the Bresnahan-Lau model, and weekly data for the period from 1996 through April 1999. To my knowledge, this is the first study of power markets that is not able to reject the hypothesis of perfect competition. The most likely reason for this absence of market power is the low ownership concentration in generation in the integrated Nordic electricity market.

[1]  Donna Brennan,et al.  Market power in the Australian power market , 1998 .

[2]  Catherine D. Wolfram,et al.  Measuring Duopoly Power in the British Electricity Spot Market , 1999 .

[3]  F. Wolak,et al.  The Impact of Market Rules and Market Structure on the Price Determination Process in the England and Wales Electricity Market , 2001 .

[4]  Timothy F. Bresnahan,et al.  The oligopoly solution concept is identified , 1982 .

[5]  James Bushnell,et al.  Market Power in Electricity Markets: Beyond Concentration Measures , 1999 .

[6]  S. Borenstein,et al.  An Empirical Analysis of the Potential for Market Power in California&Apos;S Electricity Industry , 1998 .

[7]  A. Rudkevich,et al.  Modeling Electricity Pricing in a Deregulated Generation Industry : The Potential for Oligopoly Pricing in a Poolco , 2022 .

[8]  Catherine Wolfram.  Strategic Bidding in a Multi-Unit Auction: An Empirical Analysis of Bids to Supply Electricity , 1997 .

[9]  W. D. Ray,et al.  The Econometric Analysis of Time Series. , 1981 .

[10]  S. Borenstein,et al.  The Competitive Effects of Transmission Capacity in a Deregulated Electricity Industry , 1997 .

[11]  F. Wolak.  Market Design and Price Behavior in Restructured Electricity Markets: An International Comparison , 2000 .

[12]  Catherine Wolfram.  Strategic Bidding in a Multiunit Auction: An Empirical Analysis of Bids to Supply Electricity in England and Wales , 1998 .

[13]  Lawrence J. Lau,et al.  On identifying the degree of competitiveness from industry price and output data , 1982 .

[14]  Andrew Harvey,et al.  The Econometric Analysis of Time Series - 2nd Edition , 1990 .

[15]  Frank A. Wolak,et al.  Diagnosing Market Power in California's Restructured Wholesale Electricity Market , 2000 .

[16]  Lars Bergman,et al.  Competition and Prices on the Emerging Nordic Electricity Market , 1998 .

[17]  R. Green,et al.  Competition in the British Electricity Spot Market , 1992, Journal of Political Economy.

[18]  W. Enders.  Applied Econometric Time Series , 1994 .

[19]  Shashi Kant Verma,et al.  ZONAL PRICING AND DEMAND-SIDE BIDDING IN THE NORWEGIAN ELECTRICITY MARKET , 1999 .

[20]  D. Newbery.  Pool Reform and Competition in Electricity , 1997 .

[21]  David F. Hendry,et al.  Co-Integration, Error Correction, and the Econometric Analysis of Non-Stationary Data , 1993, Advanced texts in econometrics.

[22]  Frode Steen,et al.  Testing for Market Power Using a Dynamic OLigopoly Model , 1999 .

[23]  Andrew Harvey,et al.  The econometric analysis of time series , 1991 .

[24]  J. Cardell.  Market power and strategic interaction in electricity networks , 1997 .

[25]  Lars Bergman,et al.  Market Structure and the Price of Electricity: An Ex Ante Analysis of the Deregulated Swedish Electricity Market , 1995 .