Special Issue Paper

Selecting effective divestments in electricity generation markets

  1. Giulio Federico1,2,3,*,
  2. Ángel L. López1

Article first published online: 7 DEC 2010

DOI: 10.1002/etep.528

Issue

European Transactions on Electrical Power

European Transactions on Electrical Power

Special Issue: European Energy Markets (EEM 2009)

Volume 21, Issue 6, pages 1914–1922, September 2011

Additional Information

How to Cite

Federico, G. and López, Á. L. (2011), Selecting effective divestments in electricity generation markets. Euro. Trans. Electr. Power, 21: 1914–1922. doi: 10.1002/etep.528

Author Information

  1. 1

    Public–Private Sector Research Center (IESE Business School, University of Navarra), Barcelona, Spain

  2. 2

    Charles River Associates, London, UK

  3. 3

    Charles River Associates, Barcelona GSE, Barcelona, Spain

*Public-Private Sector Research Center (IESE Business School, University of Navarra), Barcelona, Spain.

Publication History

  1. Issue published online: 29 SEP 2011
  2. Article first published online: 7 DEC 2010

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Keywords:

  • divestments;
  • market power;
  • electricity;
  • antitrust remedies

Abstract

We study the impact of electricity divestments in a stylised model where a dominant producer faces a competitive fringe with the same cost structure and is forced to sell some of its capacity. For a given demand level, the divestment which achieves the greatest reduction in prices can be several times more effective in reducing prices than a divestment of baseload (or low-cost) plants. We extend this theoretical result to the case with variable electricity demand by considering a numerical example based on data from the Italian market. Copyright © 2010 John Wiley & Sons, Ltd.

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