Template-Type: ReDIF-Article 1.0
Author-Name:  Faisal Mehmood Mirza, Olvar Bergland
Title:  Market power in Norwegian electricity market: Are the transmission bottlenecks truly exogenous?
Classification-JEL: F0
Volume:  Volume 36
Issue:  Number 4
Year:  2015
Abstract:   In this paper, we test whether producers in the southern Norway price zone utilize information on available transmission capacity to induce transmission congestion in their price zone to exercise market power or not. Endogeneity results for import congestion suggest that congestion is endogenous during late night and morning hours implying that producers in southern Norway restrict their output to induce transmission congestion into their price zone. We find an average markup of about 19.5 percent above the marginal cost during these hours. These results point that NordPool's policy of making transmission capacity information public to ensure market transparency is not welfare maximizing as strategic producers can use this information to anticipate and induce transmission congestion into their price zone for driving prices away from the competitive levels. 
Handle: RePEc:aen:journl:ej36-4-Berglan
File-URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=2655
File-Format: text/html
File-Restriction: Access to full text is restricted to IAEE members and subscribers.