Cross-ownership and concentration in MIBEL: Liberalization and integration experience

The liberalization of electricity market in Europe during the 90´s and the European aim of integrating energy national markets aimed mainly increase efficiency and decreasing energy prices for consumers. Nevertheless, a wave of mergers and acquisitions reduce the number of independent players in the market and increases the concern about market concentration and his effects on market power. In our research we follow Maxwell et al (1999) and we derive a generalized HHI (GHHI). Our concern is to evaluate the evolution of the degree of concentration in key moments for both Iberian markets separately and after the integration. The question asked in our work is if and to what extent the creation of ownership ties between generation firms can re-establish market power and undo what the liberalization and integration has achieved.