Vertical Separation v. Independent Downstream Entry in the Spanish Electricity Network: An Experimental Approach

33 Pages Posted: 25 Oct 2007  

Aitor Ciarreta

Universidad del Pais Vasco

Enrique Fatas

University of East Anglia (UEA) - Centre for Behavioural and Experimental Social Science (CBESS); University of Valencia - LINEEX

Nikolaos Georgantzis

Laboratori d'Economia Experimental (LEE); LINEEX and University Jaume I of Castellon

Carlos Gutiérrez-Hita

University Miguel Hernández

Date Written: September 2007

Abstract

We present experimental results from a series of sessions organized using the Power Market simulator; a software designed to realistically replicate the Spanish Electricity Market. In the experiments reported here we compare the status quo to two alternative treatments which represent alternative market structures. In one of them, labeled as vertical separation, we assume that power generating firms and electricity distributors-end suppliers belong to separate business groups. In the second, we study the effect of entry by independent end-suppliers. Both alternative scenarios dominate the status quo in terms of market efficiency, whereas the latter of them dominates the former.

Keywords: Experimental economics, Spanish Electricity Market, vertical relations

JEL Classification: C90, L43, L51, L53, L94

Suggested Citation

Ciarreta, Aitor and Fatas, Enrique and Georgantzis, Nikolaos and Gutiérrez-Hita, Carlos, Vertical Separation v. Independent Downstream Entry in the Spanish Electricity Network: An Experimental Approach (September 2007). NET Institute Working Paper No. 07-31. Available at SSRN: https://ssrn.com/abstract=1022426 or http://dx.doi.org/10.2139/ssrn.1022426

Aitor Ciarreta

Universidad del Pais Vasco ( email )

Avda. Lehendakari Aguirre 83
Bilbao, 48015
Spain
34946013823 (Phone)
34946017123 (Fax)

Enrique Fatas

University of East Anglia (UEA) - Centre for Behavioural and Experimental Social Science (CBESS) ( email )

United Kingdom

University of Valencia - LINEEX ( email )

Campus Tarongers
E-46022 Valencia
Spain
+34.963.828.643 (Phone)
+963.828.415 (Fax)

Nikolaos Georgantzis (Contact Author)

Laboratori d'Economia Experimental (LEE) ( email )

Campus Riu Sec
Castellón, 12071
Spain
0034964729212 (Phone)
0034964728591 (Fax)

HOME PAGE: www.lee.uji.es

LINEEX and University Jaume I of Castellon ( email )

Department of Economics
Campus Riu Sec
12080 Castellon
Spain
+34 964 728588 (Phone)
+34 964 728591 (Fax)

Carlos Gutiérrez-Hita

University Miguel Hernández ( email )

Av Universidad, s/n
Building La Galia
Elche, Alicante 03009
Spain
+ 34 966 65 88 69 (Phone)
+ 34 96 665 85 64 (Fax)

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