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Institute of Business and Economic Research
Competition Policy Center
University of California, Berkeley
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Diagnosing Market Power in California's Deregulated Wholesale Electricity Market
Severin Borenstein, University of California Energy Institute and Haas School of Business, University of California, Berkeley
James Bushnell, UC Energy Institute, Berkeley
Frank Wolak, Stanford University and NBER

Download the Paper (796 K, PDF file) - July 1, 1999 Tell a colleague about it.
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ABSTRACT:
Effective competition in wholesale electricity markets is the cornerstone of the deregulation of the electricity generation industry. We examine the degree of competition in the California wholesale electricity market during June-November 1998 by comparing the market prices with estimates of the prices that would have resulted if all firms were price takers. We find that there were significant departures from competitive pricing and that it was most pronounced during the highest demand periods. Overall, this raised the cost of power purchases by about 22% above the competitive level. We also explain why the prices observed cannot be attributed to competitive peak-load pricing.

SUGGESTED CITATION:
Severin Borenstein, James Bushnell, and Frank Wolak, "Diagnosing Market Power in California's Deregulated Wholesale Electricity Market" (July 1, 1999). Competition Policy Center. Paper CPC99-007.
http://repositories.cdlib.org/iber/cpc/CPC99-007

 
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