Market power in generation markets

Restructuring of the power industry worldwide has brought the issue of market competitiveness to the forefront. While the vertical market power has been limited by disaggregating generation and transmission, nondiscriminatory access to transmission system by power suppliers, and the creation of the Independent System Operator (ISO), the horizontal and localized market power still exists. This topic has received a great deal of attention, and much has been published on how to identify possible market power abuse and how to mitigate such abuse by market management measures. This paper presents a literature review based on more than 60 publications covering several related issues but with a focus on analysis and mitigation of the market power in electricity supply.