Nord Pool: A Power Market Without Market Power

Abstract

Regulatory reform in the Nordic electricity-supply markets has resulted in a single integrated Nordic electricity market. This paper performs an econometric study of market power in the spot market of Nord Pool, the joint Nordic power exchange. I use a dynamic extension of the Bresnahan-Lau model, and weekly data for the period from 1996 through April 1999. To my knowledge, this is the first study of power markets that is not able to reject the hypothesis of perfect competition. The most likely reason for this absence of market power is the low ownership concentration in generation in the integrated Nordic electricity market.