Export cartels in the Nordic electricity market

The purpose of this paper is to analyse the welfare effects of exports and export cartels in the Nordic market for electricity. First, we introduce a theoretical model to analyse the domestic producers' behaviour if there are exports opportunities. It is shown that the domestic firms have incentives to export more than the quantity that is optimal seen from a domestic welfare point of view. Furthermore, it is shown that an increase in imports will lower domestic welfare. Second, we use numerical simulations to indicate the absolute impact of exports. The numerical simulations suggest that in this particular market there is not any large potential for a reduction in domestic welfare as a result of exports. However, this result changes when a possible phase-out of Swedish nuclear power is considered in the numerical simulations.