The Power Equipment Industry in Transition

Abstract

This paper deals with the expected effects of the EEC Commission decision to open up EEC public procurement markets within the Single Market initiative. These effects are viewed on the behavior of European utilities and on the power equipment supplying sector. Both price and non-price effects are analyzed. The new market configuration should require a new kind of supplier, able to add the advantages of being "domestic" to the advantages of being part of a large, transnational group. Thus, such an institutional initiative can explain a large part of the general turmoil which hit the international power equipment industry in the late 1980s. However, the increasing concentration of the supply sector-also stimulated in part by the success of gas turbine technology-reduces the expectation that EEC utilities will take advantage of the opening up of their procurement markets, at least in terms of lower equipment prices.