A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000

Joskow, Paul L.; Kahn, Edward

doi:10.3386/w8157

Cited by 116 publications

(66 citation statements)

References 5 publications

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“…6 See, for instance, the study of the effect of the NO, emission allowance on the market price markups in the California market by Joskow and Kahn [25].…”

Section: Resultsmentioning

confidence: 99%

“…Several previous studies have confirmed that the competition that exists in the electricity markets is imperfect ( [6], [7], [20], [25], and [51]). In cases where there are geographical constraints on the installed capacity and the number of market participants is limited, some power producers will be able to set the market prices.…”

Section: Introductionmentioning

confidence: 89%

“…Borenstein et al suggest that the causes of this phenomenon include the power producers' ability to take advantage of inelastic demand, the capacity limits of the opponents, and the lack of storage. Other research with a similar approach, i.e., to recreate a benchmark price that was introduced by Wolfram [50], can also be found in Joskow and Kahn [25]. Joskow and Kahn analyze the California market during the summer of 2000, accounting for the effect of NO, emission allowance.…”

Section: Wolfram [50]mentioning

confidence: 99%

See 2 more Smart Citations

An Agent-Based Approach to Modeling Electricity Spot Markets

Visudhiphan

Ilić

2003

Modeling and Control of Economic Systems 2001

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Current approaches used for modeling electricity spot markets are static oligopoly models that provide top-down analyses without considering dynamic interactions among market participants. This thesis presents an alternative model, an agent-based model, and uses it to analyze the markets under various conditions. These markets, in which the participants engage in sealed-bid auctions to sell and/or buy electricity regularly, are viewed as multiagent systems, or as repeated games, played by participants with incomplete information. To represent these market characteristics, the agent-based model is selected, consisting of several power-producing agents with non-uniform portfolios of generating units. These agents employ learning algorithms, including Auer et al.'s, softmax action selection, or Visudhiphan and Ili6's model-based algorithms, in determining bid-supply functions from available information.The simulated outcomes from the agent-based model depend on the choice of non-uniform portfolios and on the learning algorithms that the agents employ. Model verifications against the actual markets are suggested; however, due to a lack of certain confidential information, numerical examples cannot be presented. Nevertheless, the model is used to analyze the effects of market structures and the effect of load-serving entities on the power-producer bidding behavior and market outcomes.This model could provide one of the main tools for regulators, system planners, and market participants to use scenario simulations to investigate market conditions that could lead to high electricity prices. The model could also be used to analyze market factors (such as new market rules) and their effects on market price dynamics and market participants' behaviors, as well as to identify the "best" response action of one participant against the opponents' actions.

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“…6 See, for instance, the study of the effect of the NO, emission allowance on the market price markups in the California market by Joskow and Kahn [25].…”

Section: Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 89%

Section: Wolfram [50]mentioning

confidence: 99%

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An Agent-Based Approach to Modeling Electricity Spot Markets

Visudhiphan

Ilić

2003

Modeling and Control of Economic Systems 2001

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“…Borenstein et al, 2002;Joskow and Kahn, 2002;Müsgens, 2006;Puller, 2007). These models are in particular useful for short-term analysis when firms face capacity constraints (Willems et al, 2009).…”

Section: Measuring Market Powermentioning

confidence: 99%

Decomposing changes in competition in the Dutch electricity market through the residual supply index

Mulder¹,

Schoonbeek²

2013

Energy Economics

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We propose to assess the influence of a number of events on the degree of competition in the Dutch electricity wholesale market over the period 2006-2011 through a decomposition method based on the Residual Supply Index. We distinguish regulatory market-integration events, firm-level events and changes in the level of residual demand.We conclude that market-integration measures to improve competition have been effective, but that the changes in residual demand appear to have been equally important.Firm-level events have only had a minor impact on the intensity of competition. JEL-codes: L1, Q41, Q48

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“…The use of simulation models, which compute mark-ups of observed (ex-post) electricity prices on predicted competitive system marginal cost at ex-post quantities, are theoretically "best-practise" for measuring market power, as shown by Joskow and Kahn [7]. Hence, simulation models have been applied widely, particularly to the former England and Wales power pool [8,9] and the Californian electricity market [10], where a broad set of cost data was available due to central planning by a (former) power pool manager.…”

Section: Introductionmentioning

confidence: 99%

Electricity pricing and market power—evidence from Germany

Janssen

Wobben

2009

Int Trans Elec Energy Syst

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The aim of this paper is to develop a methodology for measuring the exercise of potential market power in liberalized electricity markets. We therefore investigate producer behavior in the context of electricity pricing with respect to fundamental time-dependent marginal cost (TMC), i.e. CO 2 -and fuel cost. In doing so, we do not -in contrast to most current approaches to market power investigation -rely on an estimate of the entire generation cost, which inevitably suffers from the lack of appropriate available data. Applying an analytical model of a day-ahead electricity market, we derive work-on rates, which provide information about the impact of TMC variations on electricity prices in the market constellations of perfect competition, quasi-monopoly and monopoly. Comparing these model-based work-on rates with actual work-on rates, estimated by an adjusted first-differences regression model of German power prices on the cost for hard coal, natural gas and emission allowances, we find evidence of the exercise of market power in the period 2006 to 2008. However, our results reveal that German market competitiveness increases marginally. We confirm our results by simulating a TMC-driven diffusion model of futures power prices estimated by maximum-likelihood. AcknowledgementWe gratefully acknowledge the Deutsche Forschungsgemeinschaft (DFG = German Research Foundation) for financial support.

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A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000

Cited by 116 publications

References 5 publications

An Agent-Based Approach to Modeling Electricity Spot Markets

An Agent-Based Approach to Modeling Electricity Spot Markets

Decomposing changes in competition in the Dutch electricity market through the residual supply index

Electricity pricing and market power—evidence from Germany

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