Market Power in the German Wholesale Electricity Market: What are the Political Options?

22 Pages Posted: 7 Nov 2007

See all articles by Hans-Gunter Schwarz

Hans-Gunter Schwarz

affiliation not provided to SSRN

Christoph Lang

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Institute of Economics

Sonja Meier

affiliation not provided to SSRN

Date Written: April 2007

Abstract

This paper evaluates four publicly discussed policy options to mitigate market power in the German wholesale electricity market. These four options are: a regulatory solution favoured by the Federal Ministry for Economics and Technology, the implementation of a day-ahead flow-based market coupling in the Central West Region advocated by five European regulators, the expansion of cross border capacity as stipulated by the European Commission and the divestiture of dominant suppliers as proposed by the Hessian Ministry of Economics.

The following questions are answered in this paper: are these options adequate measures to mitigate market power? What are the intended and non-intended effects on market efficiency? How likely is the political implementation?

Keywords: electricity, market power, mitigating market power, German electricity market, RSI, HHI, market coupling

JEL Classification: D43, H54, K21, K23, L13, L11, L40, L41, L42, L43

Suggested Citation

Schwarz, Hans-Gunter and Lang, Christoph and Meier, Sonja, Market Power in the German Wholesale Electricity Market: What are the Political Options? (April 2007). Available at SSRN: https://ssrn.com/abstract=1028201 or http://dx.doi.org/10.2139/ssrn.1028201

Hans-Gunter Schwarz

affiliation not provided to SSRN

No Address Available

Christoph Lang (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Institute of Economics ( email )

Germany

Sonja Meier

affiliation not provided to SSRN

No Address Available

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