A multi-regional two-stage cournot model for analyzing competition in the German electricity market

Abstract

In this paper a model based analysis of competition in the German electricity market is presented. Applying a multi-regional two-stage model, which captures interregional transmission constraints and the impact of forward trading on spot market decisions, potential for exercising market power of the four dominant electricity producers has been found. Assuming Cournot behavior in the spot market, it has been shown to what extent network reinforcement between Germany and some of its neighboring countries and increased forward quantities lead to enhanced competition and decreasing market power potential within the German electricity market.