The extent of European power markets

There is an ongoing debate on the degree of integration of European wholesale power markets. A major task of the European Union is the creation of a common market in Europe and a common power market is an important part of this goal. The literature analyzing the degree of integration of European energy markets is growing and provides mixed results. We add to this literature by using national holidays as exogenous demand shocks to measure integration of European energy markets. Our main findings indicate that integration of European wholesale energy markets has increased with regard to Germany and Austria as well as Belgium and the Netherlands.