Market Power in the Nordic Power Market

摘要

Electricity markets are generally considered to be vulnerable to the exploitation of market power, which is not without reasons. There are several examples of market power in electricity markets, with California in the year 2000 as the perhaps most striking one (see e.g. Borenstein, Bushnell and Wolak, 2002; Cho and Kim, 2007; Joskow and Kahn. 2002; and Puller, 2001) for studies of market power in the Californian market). The Nordic electricity market is generally perceived as a relatively well-functioning market (see e.g. Amundsen and Bergman, 2006; Damsgaard and Green, 2005). Most studies have found little or no evidence of market power (Hjalmarsson, 2000; Johnsen, Verma and Wolfram, 1999), although the Danish competition agency has found evidence of abuse of market power in the Danish market. Over time, the market structure has also changed due to mergers and the over capacity existing from pre-deregulation time has gradually diminished, which are both factors that could contribute to increased problems with market power in the Nordic electricity market. In part I of this paper we study the potential for market power in the Nordic electricity market and in part II we study whether we can find evidence that market power has been exercised.