Vertical integration and market power: A model-based analysis of restructuring in the Korean electricity market

Bunn, Derek W.; Martoccia, Maria; Ochoa, Patricia; Kim, Haein; Ahn, Nam-Sung; Yoon, Yong-Beom

doi:10.1016/j.enpol.2010.02.049

Cited by 13 publications

(4 citation statements)

References 9 publications

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“…Their results indicate a high degree of market integration and suggest a close relationship with natural gas markets and a looser relationship with the oil market. Bunn et al (2010) conclude that market integration decreases market power.…”

Section: Literature Reviewmentioning

confidence: 88%

Volatility Spillovers in Electricity Markets: Evidence From the United States

Pantos

Polyzos

Armenatzoglou

et al. 2019

IJEEP

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This paper examines the degree of market integration, as observed by measuring volatility spillovers, in selected wholesale electricity spot markets from United States. We choose markets located at interconnected and non-interconnected areas. We use a Multivariate GARCH framework, which allows us to model time varying correlations and to conclude whether the markets show evidence of interdependency. We estimate the variance-covariance and correlation structure, in order to observe the evolution of interactions among markets, accounting for asymmetric effects. We find evidence of significant correlations between interconnected markets, which are mainly due to electricity transmission, since the observed correlations are above 0.5, but our results show that the desired level of integration has not been accomplished yet. Nevertheless, full integration is not an objective target, unless new technologies offer a boost towards that direction. Our results suggest that we should move towards a more integrated market, through legislation reforms and investment in infrastructure, which could increase competition and could lead to capital savings through lower electricity prices. The unique selection of the markets under examination and the 4-variate BEKK model for electricity markets are special characteristics of this paper.

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Section: Literature Reviewmentioning

confidence: 88%

Volatility Spillovers in Electricity Markets: Evidence From the United States

Pantos

Polyzos

Armenatzoglou

et al. 2019

IJEEP

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show abstract

“…To compound the problem, majority of research has focused on countries in Europe and North America [20] [21] [22] [23] with fewer studies conducted in Latin America [24] and Asia [25], and even fewer focused on the Sub-Saharan African context, despite the fact that many of the continent's countries are considering or have even commenced with steps towards restructuring and reforming their ESIs.…”

Section: Introductionmentioning

confidence: 99%

Review of proposals for practical power sector restructuring and reforms in a dynamic electricity supply industry

Khan

Thopil

Lalk

2016

Renewable and Sustainable Energy Reviews

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South Africa's electricity supply industry (ESI) remains a vertically-integrated monopoly despite global trends towards restructuring. The monopolistic nature of the ESI could hinder the development of distributed power systems as penetration of renewable electricity increases. The research aims to rationalise South Africa's ESI evolution; propose practical power sector restructuring in the short-to-medium term; and to determine their potential impact. The research methodology included a single case study instrument, with embedded sub-units of analysis. Primary research data was gathered using semi-structured interviews with industry experts in addition to which secondary data from government documents and archival records were used for triangulation. Research results conclude that South Africa's ESI grew due to techno-economic industrialisation factors, while Apartheid-era policies influenced the ESI in only some specific respects. The vertically-integrated status quo was sustained in the post-transformation period due to government's focus on social imperatives; lack of regulatory & policy certainty; and conflicts in political ideology. South Africa didn't experience the pre-conditions that triggered global power sector reforms in the late 20 th century but these pre-conditions are now becoming evident. Privatisation of Eskom Generation and introduction of wholesale and retail competition are not practical in the short-to-medium term, proving the infeasibility of the standard model of reform locally. The introduction of an Independent System and Market Operator (ISMO) using a single-buyer model is seen as the most favourable and practical option, with the ISMO owning transmission infrastructure. The research suggests that ESI changes will increase system efficiencies, economic performance and private sector involvement, but will not reduce electricity tariffs. The scenarios, challenges and proposals identified in this research are also applicable to other countries in Africa and other developing regions of the world, that have similar social and political backgrounds, ensuring sustainable supply of electricity.

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“…While a number of LNG suppliers are vertically integrated, effectively assuming full control of their production and distribution process (Bunn et al. , 2010), the global LNG trade is usually a multi‐party process in which the interests of the participants (i.e. buyers and suppliers) are not fully aligned.…”

Section: Methodsmentioning

confidence: 99%

“…As a result, one of the greatest challenges encountered by energy suppliers nowadays is the delivery of commodities in a timely and cost-effective manner. While a number of LNG suppliers are vertically integrated, effectively assuming full control of their production and distribution process (Bunn et al, 2010), the global LNG trade is usually a multi-party process in which the interests of the participants (i.e. buyers and suppliers) are not fully aligned.…”

Section: Research Contextmentioning

confidence: 99%

Contract Types, Institutional Distance and Operational Performance: Evidence from Global Trade Flows in the LNG Industry

Batsakis

Robotis

Koulamas

et al. 2022

British J of Management

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In this study, we examine the relationship between contract types, institutional distance and operational performance in the context of cross‐border trade in the liquefied natural gas (LNG) industry. Drawing on the buyer–supplier long‐term relationships literature, we argue for a negative link between short‐term contractual agreements and operational performance. Further, drawing insights from institutional theory, we contend that a high level of formal and informal institutional distance between the origin (i.e. supplier) and destination (i.e. buyer) countries reduces operational performance. We also argue that formal and informal institutional distance mitigates the negative effect of short‐term contracts on operational performance. Finally, we draw on the role of ‘asymmetry in distance’ by examining the direct and moderating effect of both the relevance and direction of formal institutional distance. We test our assumptions using LNG global trade flows from 39 source countries to 44 destination countries over the 2008–2017 period (a total of 17,447 shipments). Our study extends our knowledge on the operational performance implications of buyer–supplier relationships and stresses the important role formal and informal institutional distance plays as a direct and moderating effect on this relationship.

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Vertical integration and market power: A model-based analysis of restructuring in the Korean electricity market

Cited by 13 publications

References 9 publications

Volatility Spillovers in Electricity Markets: Evidence From the United States

Volatility Spillovers in Electricity Markets: Evidence From the United States

Review of proposals for practical power sector restructuring and reforms in a dynamic electricity supply industry

Contract Types, Institutional Distance and Operational Performance: Evidence from Global Trade Flows in the LNG Industry

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