Market Power Based On The Scp Paradigm Of The Electricity Market

Market power in economics is defined as the capacity of raising price by market participants. In the electricity market, market power manifests itself as electricity generation companies' power in influencing the electricity's price. The existence and especially the abuse of market power may result in high electricity price and low efficiency in the electricity market. Therefore, the study of market power has recently gained attention of economists and the electricity industry. Based on the summary of related studies on the electricity market, by employing the S-C-P (Structure -Conduct-Performance) paradigm and the Cournot model, the market power in the electricity market is systematically studied. The inherent market power in the Guangdong electricity market is then analyzed. Finally, suggestions are made for regulating the electricity price and preventing the abuse of market power.The conclusions of the thesis include: 1) the electricity market is a oligopoly market, and the technical characteristic of the production and demand of electricity and the oligopoly competition based on its are the origin of market power; 2) the uniform-price spot market of electricity can be easily impacted by the game behavior, i.e., the exercise of their market power, of the electricity generation companies. Though there are a certain level of counteractive impacts to the market power from the price-differentiation agreement and dynamics of demand, the influence of market power cannot be eliminated; 3) in the electricity market, the market power size is greatly influenced by the supply-demand relationship, extent of concentration, and market collusion. The electricity generation companies' cost and generation capacity also influences the effects of exercising market power; and 4) for the Guangdong electricity market, the imbalance in the electricity's supply-demand relationship, the highly concentrated market and the game and collusive incline of electricity generation companies may create potentially significant market power. Therefore, measures need to be taken in time to constrain the market power.