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Market power analysis in the Iberian electricity market using a conjectural variations model

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  • Lagarto, João
  • Sousa, Jorge A.M.
  • Martins, Álvaro
  • Ferrão, Paulo

Abstract

In the last years the electricity industry has faced a restructuring process. Among the aims of this process was the increase in competition, especially in the generation activity where firms would have an incentive to become more efficient. However, the competitive behavior of generating firms might jeopardize the expected benefits of the electricity industry liberalization. The present paper proposes a conjectural variations model to study the competitive behavior of generating firms acting in liberalized electricity markets. The model computes a parameter that represents the degree of competition of each generating firm in each trading period. In this regard, the proposed model provides a powerful methodology for regulatory and competition authorities to monitor the competitive behavior of generating firms.

Suggested Citation

  • Lagarto, João & Sousa, Jorge A.M. & Martins, Álvaro & Ferrão, Paulo, 2014. "Market power analysis in the Iberian electricity market using a conjectural variations model," Energy, Elsevier, vol. 76(C), pages 292-305.
    • Handle: RePEc:eee:energy:v:76:y:2014:i:c:p:292-305
    DOI: 10.1016/j.energy.2014.08.014
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    2. Ciarreta, Aitor & Nasirov, Shahriyar & Silva, Carlos, 2016. "The development of market power in the Spanish power generation sector: Perspectives after market liberalization," Energy Policy, Elsevier, vol. 96(C), pages 700-710.
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    5. Keles, Dogan & Dehler-Holland, Joris & Densing, Martin & Panos, Evangelos & Hack, Felix, 2020. "Cross-border effects in interconnected electricity markets - an analysis of the Swiss electricity prices," Energy Economics, Elsevier, vol. 90(C).
    6. Aryani, Morteza & Ahmadian, Mohammad & Sheikh-El-Eslami, Mohammad-Kazem, 2021. "Coordination of risk-based generation investments in conventional and renewable capacities in oligopolistic electricity markets: A robust regulatory tool," Energy, Elsevier, vol. 214(C).
    7. Marques, António Cardoso & Fuinhas, José Alberto & Neves, Sónia Almeida, 2018. "Ordinary and Special Regimes of electricity generation in Spain: How they interact with economic activity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1226-1240.
    8. Panos, Evangelos & Densing, Martin, 2019. "The future developments of the electricity prices in view of the implementation of the Paris Agreements: Will the current trends prevail, or a reversal is ahead?," Energy Economics, Elsevier, vol. 84(C).
    9. Wan, Yi & Kober, Tom & Densing, Martin, 2022. "Nonlinear inverse demand curves in electricity market modeling," Energy Economics, Elsevier, vol. 107(C).
    10. Szőke, Tamás & Hortay, Olivér & Balogh, Eszter, 2019. "Asymmetric price transmission in the Hungarian retail electricity market," Energy Policy, Elsevier, vol. 133(C).
    11. Sousa, Joana & Soares, Isabel, 2022. "Demand response potential: An economic analysis for MIBEL and EEX," Energy, Elsevier, vol. 244(PA).
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    13. Sousa, Joana & Soares, Isabel, 2020. "Demand response, market design and risk: A literature review," Utilities Policy, Elsevier, vol. 66(C).

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