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| Author: | Wolak, F. A. |
| Title: | Measuring Unilateral Market Power in Wholesale Electricity Markets: The California Market, 1998-2000 |
| Journal: | American Economic Review
2003 : MAY, VOL. 93:2, p. 425-430 |
| Index terms: | ELECTRICITY SUPPLY INDUSTRY USA WHOLESALING |
| Language: | eng |
| Abstract: | This paper measures the unilateral incentive each of the five largest electricity suppliers in California had to exercise market power in the state's wholesale market during the four-month period from 1 June to 30 September of 1998, 1999, and 2000. Using the actual bids submitted to the California Independent System Operator's (CAISO) real-time energy market, the author computes the hourly price elasticity of the ex post residual demand curve faced by each supplier evaluated at the market-clearing price for that hour. The inverse of this hourly ex post residual demand elasticity quantifies the extent to which that supplier is able to raise the hourly real-time energy price above its marginal cost of supplying the last megawatt-hour it sells in the CAISO's real-time energy market. |
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