IFN Working Paper No. 1113, 2016 Market Power and Joint Ownership: Evidence from Nuclear Plants in Sweden Erik Lundin Research Institute of Industrial Economics P.O. Box 55665 SE-102 15 Stockholm, Sweden
[email protected] www.ifn.se Market Power and Joint Ownership: Evidence from Nuclear Plants in Sweden Erik Lundin∗ November 4, 2019. Abstract This paper presents an empirical test of the anticompetitive effects of joint own- ership by examining the operation of three nuclear plants in Sweden. Since main- tenance is the main conduit explaining variation in output, I formulate a model of optimal maintenance allocation given three behavioral assumptions: i) maximal col- lusion, where all owners’ profits on both nuclear and other output are maximized; ii) Cournot competition, where the majority owners’ profits on both nuclear and other output are maximized; and iii) a divested solution, where all owners’ profits on nuclear output are maximized, but no weight is given to non-nuclear output. The behavior that fits the data best is a “hybrid” model where maximal collusion is only achieved during periods of the year when regulatory oversight is less strict. During the remainder of the year, data is instead most consistent with the divested solution. JEL-Classification: L13, L22, L94, D22, D43, D44 Keywords: Joint ownership, electricity wholesale market, nuclear, maintenance, collu- sion, regulatory threat. ∗Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Email:
[email protected]. I would like to thank Mar Reguant, Thomas