Market power in developing countries

This paper elaborates on the major factors that drive market power in developing countries. These factors include (i) inherited-structural/political considerations that impact the ability of suppliers to exercise horizontal market power, (ii) economic/market drivers that determine the degree of competition and (iii) physical forces that significantly influence the design of market architecture and the degree of market power. In addition, some forms of Herfindahl-Hirschman Index (HHI) in the form of suppliers´ proportional energy share, taking into account both political induction (i.e. cartel arrangement) an physical constraints (i.e. transmission congestion and local markets) are also presented. Numerical examples using a 14-suppliers in a 14-node system market are also presented to illustrate the results of the proposed indices.