The Scandinavian electricity power market and market power | Haukur Eggertsson
| | Abstract | Recent high prices on the Scandinavian electric power market have led to public scrutiny of the market and have been the source of investigation of legal authorities.
Although the Nord Pool spot market is considered to be one of the most successful electricity markets in the world, and one of few international electricity markets, the market is small in comparison to many other commodity markets, and is as such, together with the difficulty of storing electricity, less liquid and subject to more instability in prices and supply. In addition, due to limited transmission capacities between the areas that form the common markets, prices often vary between market areas. This can also give electricity generators a large market share in different areas, even though they only hold a modest market share on the total market.
This thesis is a study of the possible uses of market power on the Nord Pool spot market and how this kind of market behavior, especially with regard to the game theory and Nash equilibria, can be detected.
This is certainly not by any means an accusation against any member of the Nord Pool market, although the theoretical possibilities of some of them exercising market power, is discussed.
My findings are that searching for Nash equilibria is not the most effective way of market power detection, due to the many uncertainties involved and the lack of information market power users as well as market power detectors will face. | | Type | Master's thesis [Academic thesis] | | Year | 2003 | | Publisher | Informatics and Mathematical Modelling, Technical University of Denmark, DTU | | Address | Richard Petersens Plads, Building 321, DK-2800 Kgs. Lyngby | | Series | IMM-Thesis-2003-46 | | Note | Supervisor: Henrik Madsen | | Electronic version(s) | [pdf] | | BibTeX data | [bibtex] | | IMM Group(s) | Mathematical Statistics |
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