Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 28: Nord Pool: A Power Market Without Market Power

Erik Hjalmarsson ()
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Erik Hjalmarsson: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Department of Economics., School of Economics and Commercial Law, Göteborg University, Box 640, SE 405 30 GÖTEBORG

Abstract: Regulatory reform in the Nordic electricity-supply markets has resulted in a single integrated Nordic electricity market. This paper performs an econometric study of market power in the spot market of Nord Pool, the joint Nordic power exchange. I use a dynamic extension of the Bresnahan-Lau model, and weekly data for the period from 1996 through April 1999. To my knowledge, this is the first study of power markets that is not able to reject the hypothesis of perfect competition. The most likely reason for this absence of market power is the low ownership concentration in generation in the integrated Nordic electricity market.

Keywords: electricity markets; deregulation; market power; spot market; power exchange; electricity pool; cointegration

JEL-codes: C32; C51; D41; D43; L13; L51; L94

39 pages, August 18, 2000

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