ASSESSING COMPETITION IN BRAZIL’S ELECTRICITY MARKET IF BID-BASED DISPATCH WERE ADOPTED

Abstract

ABSTRACT Market simulation, based on structural characteristics, is a useful tool for ex-ante competition analysis of major market changes, such as: market liberalization, mergers and acquisitions, divestitures, and regulatory reforms. In this paper, Cournot-Nash simulation is used to evaluate the expected market equilibrium if the Brazilian electricity market were liberalized. A sensitivity analysis is utilized to evaluate how the market equilibrium is impacted by different factors, such as: different demand price elasticities, divestiture of the dominant market player, different initial equilibrium point and different hydro inflow scenarios.