MEASURING COMPETITION AND MARKET POWER OF THE IBERIAN ELECTRICITY MARKET USING CONCENTRATION AND MARKET POWER ESTIMATORS

This study sought to infer the evolution of the competition in the upstream segment of MIBEL (2007-2014), through the calculation, analysis and interpretation of concentration and market power indicators such as Herfindahl-Hirschman Index, Pivotal Supplier Index and Residual Supplier Index. In order to achieve this purpose, two analysis' levels were considered. An aggregated one focused on the whole Iberian Market during the entire observed period, and another one, which both markets that compose the MIBEL were analysed separately, for the hours which a market split occurred. Our findings reveal that the MIBEL concentration levels decreased during the analysis' period, as well as never a supplier was assumed as pivotal except in a few hours in 2007. Thus, we can assume that the MIBEL is competitive, as well as there was no place for a potential market power exercise. In the hours which a price differential has occurred between both countries, the Spanish case is so much similar when compared with the Iberian Market, in an aggregated perspective. By the other hand, the Portuguese case is facing a serious state of high market concentration levels as well as a high potential of market power exercise from its pivotal supplier.