Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Friday, December 13, 2019

Pricing Patterns in Wholesale Electricity Markets: Unilateral Market Power or Coordinated Behavior?

By: Brown, David P. (University of Alberta, Department of Economics); Eckert, Andrew (University of Alberta, Department of Economics)
Abstract: We examine allegations that firms in Alberta's electricity industry manipulated public information to coordinate in the wholesale market. We investigate whether bids by firms who employed unique pricing patterns were consistent with unilateral expected profit maximization. Our results suggest that these firms could have increased expected profits through unilateral deviations. For one firm, the potential to increase profits is greater on days when certain offer patterns are observed, providing support for the claim that such patterns may have assisted coordination on high-priced outcomes. These results suggest that regulators should exercise caution when designing information disclosure policies in concentrated electricity markets.
URL: http://d.repec.org/n?u=RePEc:ris:albaec:2019_009&r=com

https://lawprofessors.typepad.com/antitrustprof_blog/2019/12/pricing-patterns-in-wholesale-electricity-markets-unilateral-market-power-or-coordinated-behavior.html

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