Do bottlenecks generate market power? : an empirical study of the Norwegian electricity market
Working paper
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http://hdl.handle.net/11250/162802Utgivelsesdato
2003-12Metadata
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Sammendrag
The present study analyses the potential non-competitive effects of capacity restrictions –
socalled bottlenecks - in the Norwegian electricity market. We specify a structural model, and
econometrically identifies market power both for the periods with no capacity restrictions on
the grid, and the bottleneck periods. We analyse the largest region, Southern Norway that
amounts to three fourths of the Norwegian market. The demand side is found to be inelastic.
On average we find the market to be competitive. However, the bottleneck period estimates
suggest a significant but small short run markup when the grid is capacity restricted. Hence,
within the day or hours when bottlenecks appear it seems as the producers exploit some limited market power.
Utgiver
Norwegian School of Economics and Business Administration. Department of EconomicsSerie
Discussion paper2003:26