Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307979 
Year of Publication: 
2024
Series/Report no.: 
ifo Working Paper No. 414
Publisher: 
ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Munich
Abstract: 
During the energy crisis in 2022, electricity prices in Germany soared to unprecedented levels. To explore the drivers of the high electricity prices, we develop an electricity dispatch model that simulates hourly equilibrium prices under the assumption of perfect competition. We then extend this model to account for firms exercising market power. By comparing the outcomes of the perfect competition and Cournot competition models with actual market data, we demonstrate that market power may contributed to higher prices during the crisis, elevating them beyond what rising input costs alone would justify.
Subjects: 
Energy Economics
Market Power
Energy Crisis
Electricity Prices
Cournot Competition
JEL: 
Q41
Q43
L13
D43
L94
Document Type: 
Working Paper

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