The development of market power in the Spanish power generation sector: Perspectives after market liberalization

Aitor Ciarreta, Shahriyar Nasirov, Carlos Silva
Energy Policy 96 (2016) 700–710

This paper provides a comprehensive analysis of the market power problem in the Spanish power generation sector and examines how and to which extent the market has developed in terms of market power concerns after the market liberalization reforms.The methodology applied in this study includes typical ex-post structural and behavioral measures employed to estimate potential for market power, namely: concentration ratios (CR) (for the largest and the three largest suppliers), the Herfindahl–Hirschman Index (HHI), Entropy, Pivotal Supply Index, the Residual Supply Index and Residual Demand Elasticity (RDE). The results are presented for the two largest Spanish generating companies (Endesa and Iberdrola) acting in the Iberian Electricity Market (MIBEL), and in the Spanish Day-ahead electricity market. The results show evidence that these companies have behaved much more competitively in recent periods than in the beginning of the market liberalization. In addition, the paper discusses important structural and regulatory changes through market liberalization processes in the SpanishDay-ahead electricity market.

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