Skip to main content
Article thumbnail
Location of Repository

The More Cooperation, the More Competition? A Cournot Analysis of the Benefits of Electric Market Coupling

By Benjamin F. Hobbs and F. A. M. Rijkers

Abstract

Market coupling in Belgian and Dutch markets would permit more efficient use of intercountry transmission, 1) by counting only net flows against transmission limits, 2) by improving access to the Belgian market, and 3) by eliminating the mismatch in timing between interface auctions and the energy spot market. A Cournot market model that accounts for the region’s transmission pricing rules and limitations is used to simulate market outcomes with and without market coupling. This accounts for 1) and 2). Market coupling improves social surplus in the order of 108 €/year, unless it encourages the largest producer in the region to switch from a price-taking strategy in Belgium to a Cournot strategy due to a perceived diminishment of the threat of regulatory intervention. Benefit to Dutch consumers depends on the behavior of this company. The results illustrate how large-scale oligopoly models can be useful for assessing market integration

Topics: Electric power, Electric transmission, Liberalization, Oligopoly, Complementarity models, Computational models, Netherlands, Belgium, France, Germany, Market Coupling
Publisher: Faculty of Economics
Year: 2006
OAI identifier: oai:www.repository.cam.ac.uk:1810/131629
Provided by: Apollo

Suggested articles

Citations

  1. (2001). Alternative Models of Restructured Electricity Systems, 25 Linking markets decreases necessary generation reserves because their demand peaks may not coincide,
  2. (2002). An Empirical Study of Applied Game Theory: Transmission Constrained Cournot Behavior.” doi
  3. (1999). Analyzing Strategic Bidding Behavior in
  4. (2003). Benelux Market Integration: Market Power Concerns. The Netherlands Market Surveillance Committee, The Hague,
  5. (2003). Combining Energy and Transmission Markets Mitigates Market Power,”
  6. (2002). Comments on the London Economics Methodology for Assessing the Benefits of Transmission Expansions.” California Independent System Operator,
  7. (2004). Complementarity-Based Equilibrium Modeling for Electric Power Markets.”
  8. (1997). Computable Equilibrium Models and the Restructuring of the doi
  9. (2001). Congestion Management in the European Electricity System: An Evaluation of the Alternatives.”
  10. (1992). Contract Networks for Electric Power Transmission.” doi
  11. (2002). Coordinated Auctioning of Cross-Border Capacity: A Comparison,” doi
  12. (1993). Cournot Competition, Forward Markets and Efficiency.” doi
  13. (2002). Differences in the Price of Electricity to Industrial Users in the Netherlands and Neighboring Countries: Underlying Determinants,
  14. (2002). Do Forward Markets Enhance Competition?, Experimental Evidence, doi
  15. (1997). Economic Inefficiency of Passive Transmission Rights doi
  16. (2004). Electricity Infrastructure and Security of Supply: Should EU Governments Invest in Transmission Capacity?" Oxford Energy Comment
  17. (2004). Electricity Market Modeling Trends.” Energy Policy, doi
  18. (2004). Market Analysis Report for
  19. (2004). Market Structure and Competition: A Cross-Market Analysis of U.S. Electricity Deregulation”, doi
  20. (2003). Modeling Strategic Bidding Behavior
  21. (2004). Modeling Strategic Generator Behavior with Conjectured Transmission Price Responses in a Mixed Transmission Pricing System I: Formulation and II. doi
  22. (2004). Modeling Strategic Generator Behavior with Conjectured Transmission Price Responses in a Mixed Transmission Pricing System: II. doi
  23. (2003). Nash-Cournot Equilibria in Power Markets on a Linearized DC Network with Arbitrage: Formulations and
  24. Network-Constrained Models of Liberalized Electricity Markets: The Devil is in the Details,” doi
  25. (2002). Oligopolistic Competition in Power Networks: A Conjectured Supply Function Approach.” doi
  26. (2004). Onderzoek Ontwikkeling Liquiditeit Electriciteitsmarkt 2003-2004, Office of Energy Regulation (dTE), The Hague,
  27. (1999). Spatial Oligopolistic Electricity Models with Cournot Generators and Regulated Transmission Prices.” doi
  28. (1988). Spot Pricing of Electricity. doi
  29. (2000). Strategic Gaming Analysis for Electric Power Networks: An doi
  30. (2003). The Development of a Spot Market Exchange Infrastructure for Belgium.” The Brattle Group,
  31. (1999). The Electricity Contract Market in England and doi
  32. (1992). The Linear Complementarity Problem, doi
  33. (1995). The PATH Solver: A Non-Monotone Stabilization Scheme for Mixed Complementarity Problems.” Optim. doi
  34. (2002). Toward a Common European Electricity Market: Paths in The Right Direction, Still Far From an Effective Design.”
  35. (2000). Transmission Rights and Market Power on Electric Power Networks.” doi
  36. (2003). Using Implicit Auctions to Manage Cross-Border Congestion: ‘Decentralised Market Coupling’,” 10 th Meeting of the European Electricity Regulatory Forum,
  37. (2001). Variational Inequality Models of Restructured Electric Systems.” doi
  38. (2003). Why Does an Efficient Electricity Market Require Coordination Mechanisms Between Power Generation, Transmission,

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.