Facebook LinkedIn Twitter
Shop

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

Will Cross-Ownership Re-Establish Market Power in the Nordic Power Market?

Abstract:
The integration of the power markets in Norway and Sweden in 1996 significantly constrained the major power companies' ability to exercise market power within their national borders. In recent years, however, mergers and reciprocal acquisition of shares have reduced the number of independent players on the Norwegian-Swedish power market. The aim of this paper is to explore to what extent increasing cross-ownership among the major power companies in Norway and Sweden might re-establish the market power that was lost when the two national power markets were integrated. The analysis is based on a numerical model, assuming Cournot quantity setting behavior, of the Norwegian-Swedish power market. The simulation results suggest that partial ownership relations between generators tend to increase horizontal market power and thus the market price of electricity.

Purchase ( $25 )

Energy Specializations: Energy Modeling – Energy Data, Modeling, and Policy Analysis; Electricity – Markets and Prices ; Electricity – Policy and Regulation

JEL Codes: Q42: Alternative Energy Sources, Q41: Energy: Demand and Supply; Prices, D21: Firm Behavior: Theory, L11: Production, Pricing, and Market Structure; Size Distribution of Firms, L13: Oligopoly and Other Imperfect Markets, D22: Firm Behavior: Empirical Analysis, D43: Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection

Keywords: electricity, cross-ownership, market power, Norway, Sweden

DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No2-3


Published in Volume23, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.