Checking for Market Power in Electricity: The Perils of Price-Cost Margins

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https://ipa.org.au/wp-content/uploads/archive/brennan.pdf

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Timothy J. Brennan, Checking for Market Power in Electricity: The Perils of Price-Cost Margins,https://ipa.org.au/wp-content/uploads/archive/brennan.pdf

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Abstract

Concerns have been expressed around the world that the newly opened electricity markets have failed to be sufficiently competitive. The competitiveness of electricity markets in the U.K. has been questioned almost since their inception. The California electricity market “meltdown” in the summer of 2000 brought with it numerous accusations and analyses of the role that inadequate competition played in creating price spikes and destabilizing the market. Recently, Short and Swan have produced a thoughtful study of market power in the Australian electricity sector. The study is especially valuable for clear and useful displays of bidding data.