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Biofuels and Market Power - The Case of Swedish District Heating Plants

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  • Sjöström, Magnus

    (Department of Economics, Umeå University)

Abstract

This paper tests for market power on the market for biofuels, employing a statistical model and making use of the idea of Granger causality. We use a panel data set of plant specific input prices and quantities of wood chip covering 91 Swedish district heating plants 1990-1996. If quantity Granger causes price, it is taken as an indication of market power. We find that the Swedish district heating plants to some degree have market power in the market for wood chips.

Suggested Citation

  • Sjöström, Magnus, 2004. "Biofuels and Market Power - The Case of Swedish District Heating Plants," Umeå Economic Studies 634, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:0634
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    References listed on IDEAS

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    1. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-1395, November.
    2. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    3. Atkinson, Scott E & Kerkvliet, Joe, 1989. "Dual Measures of Monopoly and Monopsony Power: An Application to Regulated Electric Utilities," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 250-257, May.
    4. Erdal Atukeren, 1994. "A note on the tests of Granger-causality between exports and economic growth," Applied Economics Letters, Taylor & Francis Journals, vol. 1(11), pages 207-209.
    5. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    6. Roberts, Mark J., 1984. "Testing oligopolistic behavior," International Journal of Industrial Organization, Elsevier, vol. 2(4), pages 367-383, December.
    7. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    8. Runar Brannlund & Per-Olov Marklund & Magnus Sjostrom, 2004. "Evaluating market efficiency without price data: the Swedish market for wood fuel," Applied Economics, Taylor & Francis Journals, vol. 36(1), pages 31-39.
    9. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    10. Chien-Hsun Chen, 1993. "Causality between Defence Spending and Economic Growth: The Case of Mainland China," Journal of Economic Studies, Emerald Group Publishing, vol. 20(6), pages 37-43, October.
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    Cited by:

    1. Ankarhem, Mattias, 2005. "Effects of Increased Demand for Biofuels: A Dynamic Model of the Swedish Forest Sector," Umeå Economic Studies 658, Umeå University, Department of Economics.
    2. Rezaie, Behnaz & Rosen, Marc A., 2012. "District heating and cooling: Review of technology and potential enhancements," Applied Energy, Elsevier, vol. 93(C), pages 2-10.
    3. Ankarhem, Mattias, 2005. "Bioenergy, Pollution, and Economic Growth," Umeå Economic Studies 661, Umeå University, Department of Economics.

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    More about this item

    Keywords

    market power; Granger causality; VAR; biofuel; district heating;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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