Project Manager
Thomas TangeråsProject manager
Institute for Business ResearchAmount granted
657 000 SEKYear
2023
In imperfectly competitive markets, firms use market power to charge excessive prices. Inefficiencies arise because customers refrain from buying even if their willingness to pay is higher than the cost of producing the good. Overpricing also leads to redistribution of income from consumers to firms. Quantitative analysis of market power is thus fundamental to evaluating how efficiently markets function and the degree of redistribution they generate. Existing methods for estimating competition have significant weaknesses because they are sensitive to assumptions that must be made about demand and cost conditions but cannot be verified. This is the second part of a project to develop methods that provide more reliable estimates of competition in the market by making minimal assumptions about underlying demand and costs. The second main objective of the project is to apply these methods to evaluate the extent to which firms exercise market power in the Nordic electricity market.