Open Access Te Herenga Waka-Victoria University of Wellington
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How much hydropower should the government own?

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posted on 2023-06-09, 05:46 authored by Lockyer, Trent

Many countries have decentralised previously highly regulated electricity generation markets. The literature studying these markets has raised concerns regarding the potential for exploitation of market power. We study a mixed market in which ownership of hydropower is split between private and public firms. A central planner allocates water between the two hydropower firms, trading off the productive inefficiency of the public firm and the exploitation of market power by the private firm. If demand, over time, is either close to uniform, or exceptionally variable, then the public firm serves no value. However, between these extremes, the central planner allocates water to both firms. In this range we find the public firm can offset enough of the effects of market power that a mixed market achieves superior welfare outcomes to a model of full private ownership.


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Date of Award



Te Herenga Waka—Victoria University of Wellington

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Degree Discipline


Degree Grantor

Te Herenga Waka—Victoria University of Wellington

Degree Level


Degree Name

Master of Commerce

ANZSRC Socio-Economic Outcome code

170803 Hydro-electric energy; 159902 Ecological economics; 150503 Industrial organisations; 150504 Industry costs and structure

ANZSRC Type Of Activity code

2 Strategic basic research

Victoria University of Wellington Item Type

Awarded Research Masters Thesis



Victoria University of Wellington School

School of Economics and Finance


Robles, Jack