Market Power in the England and Wales Wholesale Electricity Market 1995-2000

By Andrew Sweeting. 2004

174 citations recorded by the source corpus.

This article shows that generators exercised considerable market power in the England and Wales wholesale electricity market in the late 1990s. This is surprising because static oligopoly models predict that falling market concentration should have reduced market power. The article tests the equilibrium assumption of these models that each generator's bids should maximise its short-run profits given the bids of other generators. It finds that the two largest generators could have profitably increased their output from the beginning of 1997. Their behaviour was consistent with tacit collusion.

Subfields: Electrical and Electronic Engineering, Safety, Risk, Reliability and Quality, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/c2cc42fd2a1bb024f95ccabca32e4c8a26daa1fc

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Citations in the corpus

Missing Money and Missing Markets: Reliability, Capacity Auctions and Interconnectors (2015, background): “The Electricity Pool of England and Wales also added the CP of (1), but allowed generators to offer an unrestricted supply function (which, given their market power, was often above SRMC, Green and Newbery, 1992; Newbery, 1995; Sweeting, 2007).”
Incomplete Environmental Regulation, Imperfect Competition, and Emissions Leakage (2008, unknown): “12 In the past, …rms in industries targeted by existing and planned incomplete environmental regulation have been able to exercise market power by restricting supply (Borenstein, Bushnell and Wolak, 2002; Sweeting, 2007).”
Lessons Learned From Electricity Market Liberalization (2008, background): “Clearly, the decision to create only three generating companies out of the state-owned CEGB, two of which set the clearing price in the wholesale market in almost all hours, led to significant market power problems that persisted for several years (Wolfram 1999, Sweeting 2007).”