Wednesday, January 25, 2012
An Examination of Frank Wolak's Model of Market Power and Its Application to the New Zealand Electricity Market
Posted by D. Daniel Sokol
Lewis T. Evans, Victoria University of Wellington - New Zealand Institute for Study of Competition and Regulation Inc. (ISCR) and Graeme Guthrie, Victoria University of Wellington - School of Economics & Finance An Examination of Frank Wolak's Model of Market Power and Its Application to the New Zealand Electricity Market.
ABSTRACT: We appraise the theoretical basis and the consequent empirical work of Frank Wolak in his study of the New Zealand Electricity market in a report to the New Zealand Commerce Commission released in March 2009. The report found no multilateral actions, but concluded there was evidence of market power. We find that the theoretical and empirical methodologies employed do not imply the existence of unilateral market power in oligopoly electricity markets.