Network Industry Liberalization: The Case of the England and Wales Electricity Market

Tashpulatov, Sherzod

The dissertation consists of a general introduction on network industries and three chap- ters. The first and second chapters analyze the behavior of electricity producers at a uniform price auction. In the first chapter I examine market power manifested in sub- mitting price bids in excess of marginal production costs. The theoretical model allows identifying the incentive and disincentive to exercise market power. Then an empirical analysis is performed at the level of producer and production unit of various input types used in electricity production. I examine how the incentive and disincentive to exercise market power change during different regulatory regime periods and draw conclusions regarding the effectiveness of regulatory reforms to improve competition. The second chapter, which is coauthored with Lubomír Lízal, investigates another possible means of increasing prices. In particular, we examine if producers apply a capacity cutting strategy to increase prices. This strategy may be feasible when a significantly large increase in demand is forecasted so that a market operator will have to use high-cost (and sometimes even less efficient), i.e., expensive, production facilities to satisfy demand. The major purpose of this research is to analyze whether the regulatory reforms decreased the extent...

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