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Market power issues in the reformed Russian electricity supply industry

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  • Nadia Chernenko

Abstract

The paper examines long—run and short—run levels of market power in the liberalised Russian electricity market we observe that despite potential for market power abuse, actual exercise of market power as measured by Drice-cost markups remained low. we attribute the result to the bid-at--cost rule mplemented as a part of a special unit commitment procedure on the day-ahead market. we first look at the restructured industry and discuss the mergers and acquisitions and their impact on competition in long term. The M&A were undertaken in different market zones and thus did not seem to increase concentration (HHI remains almost unchanged) although with future zone nteration competition in long run is put at risk, we then examine short run 1eve of market power by estimating hourly price cost mark-ups and assess my their dynamics in 2010 and 2011, a year preceeding and following the market liberalisation respectively. Using time series models (AR models) we reject hypotnesis of actual market power abuse Further, using a lob-it regression we find that the liberalisation decreased the mark-ups by about 1 66 percentage points.

Suggested Citation

  • Nadia Chernenko, 2013. "Market power issues in the reformed Russian electricity supply industry," Cambridge Working Papers in Economics 1358, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1358
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    1. Chernenko, Nadia, 2015. "Market power issues in the reformed Russian electricity supply industry," Energy Economics, Elsevier, vol. 50(C), pages 315-323.

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    More about this item

    Keywords

    Russian electricity market; liberalisation; market power; concentration; price-cost mark—ups Classification-JEL; L11; L13; L94 File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1358.pdf;
    All these keywords.

    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
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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