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Abstract:
In the new deregulated competitive Italian electricity many interesting issues arise as the market complexity, the firm strategic behavior, the market power size, and so on. Effective competition in the electricity market is a necessary features of a successful supply industry restructuring. In this paper we examine the degree of competition in the Italian market during the period April 2004 to December 2004 in two principal ways. In the first one we estimate a very intuitive relation among the differences between the hourly equilibrium price (ph) and the individual hourly bids that the competitors offer around ph, and a large set of structural and behavioral variables. In the second one the aim is twofold. The first one is to build the residual demand for each Italian Generation Company. The construction of the residual demand curve system is the necessary condition to get the second aim which is to measure the unilateral market power for the Italian Generation Companies. Following Wolak (2003) approach the appropriate measure of the unilateral market power is the Lerner index based on the residual demand curve elasticity which is computed as arc elasticity. The expected results is a deeper understanding of the Wholesale Italian Electricity Markets and of its mechanism in order to enhance competition and to design appropriate market surveillance.

Market power, Lerner index, Residual demand

Abstract:
This paper investigates the existence of contagion effects in electricity markets. The concept of contagion has been developed for high frequency financial markets, see the World Bank definition(Word Bank, 2000). Following Pick (2005) and Pesaran - Pick (2007) the paper presents a canonical, econometric model of contagion and investigates the conditions under which contagion can be distinguished from mere interdependence. The theoretical and empirical distinction between contagion and interdependence is based upon precise identification conditions, discussed in the paper. The empirical analysis is based on different regional markets in the Italian Power Exchange (IPX) and we focus only on pure contagion relationship in the IPX at the Italian regional level. This is a novel result in economic literature. The analysis and identification of contagion requires that each individual market equations contains market specific regressors, consequently we have to involve market specific variables in structural equations in order to correctly specify the model. Pesaran - Pick (2007, p. 1266) show that ignoring endogeneity and interdependence can introduce a substantial upward bias in estimation of contagion coefficient. In general, problems of endogeneity requires usage of instrumental variables (IV)estimation and, in agreement with Pick (2005), we obtain consistency by including regional market specific fundamentals. The most important conclusions of this paper are that contagion can be identified separately from interdependence and that effects are asymmetric.

Contagion, Interdependence, Identification, IPX

Abstract:
The composition of Italian household wealth has undergone significant changes in the last decade, partly reflecting the growth of public debt and monetary policies aimed at encouraging its absorption by the household sector. Within a theoretical framework consistent with the "money in the utility function" approach, this paper investigates household preferences for liquidity services provided by short-term financial assets. In the attempt to explain the factors underlying those changes, the empirical analysis provides information on the pattern of substitution for the main components of financial wealth and permits analysis of a variety of government interventions in asset markets.