An Examination of Frank Wolak's Model of Market Power and Its Application to the New Zealand Electricity Market

Lewis T. Evans, Graeme Guthrie
2011 Social Science Research Network  
We appraise the theoretical basis and the consequent empirical work of Frank Wolak in his study of the New Zealand Electricity Market in a report to the New Zealand Commerce Commission released in March 2009. The report found no multilateral actions, but concluded there was evidence of unilateral market power. We find that the theoretical and empirical methodologies employed to reach this position do not substantiate it, and that the building blocks of this study provide no blue-print for study
more » ... of market power in any electricity market. JEL Classification code: L41, L13 Keywords: electricity markets, market power * This paper is part of a wider symposium on the subject of the Wolak Report that include papers by the authors and Seamus Hogan and Peter Jackson of Canterbury University. We thank participants at a University of Auckland Electric Power Optimisation Centre seminar for their comments on a seminar paper covering similar material.
doi:10.2139/ssrn.1967988 fatcat:garttdg4j5a5jj33noonw6ukym