Application of a Structural Model to the Spanish Electricity Wholesale Market
The aim of this work is to analyse the behaviour of agents in highly concentrated and strongly regulated electricity wholesale markets with rigid demand. In order to accomplish this aim, the analysis was based on the former Spanish electricity generation market, between January 1999 and June 2007, before the MIBEL (Iberian Electricity Market) has started. The analysis is carried out in the theoretical framework of the structural models. Despite the characteristics of this market, the paper suggests that the average high mark-ups observed in the period examined were very likely due to the implementation of anti-competitive strategies. Therefore, the analysis carried out shows that the opening of a wholesale electricity market without the prior increase in the number of market players does not prevent, by itself, the manipulation of the market, even when the market is strongly regulated.