Theory and Policy
- The Loyola de Palacio Series on European Energy Policy
Edited by Pippo Ranci and Guido Cervigni
Market power is a company’s ability to profitably raise and maintain prices above the level that would prevail under competition. Market power is a primary concern in wholesale electricity markets for two broad reasons. The first is that electricity is a primary commodity purchased by every household and business, and its price is extremely important for the economy. The second is that the unique technical and economic characteristics of electricity make wholesale electricity markets particularly vulnerable to the exercise of market power. These characteristics are little or no demand responses to price changes, the fact that electricity is not storable, and tight transmission capacity constraints that reduce the scope for competition among generators connected in different locations. As a result, even small generators may have the interest and ability to induce dramatic price increases under certain conditions. The problem is exacerbated by the highly concentrated industries that have resulted in most countries from the liberalisation of electricity generation.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.