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The Price Impact of Energy Vouchers

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  • Marion Podesta, Jean-Christophe Poudou, and Michel Roland

Abstract

France and South Korea have implemented voucher programs to counter energy poverty. In contrast to goods that traditional voucher programs target, the market structure that dominates energy supply is the oligopoly. In this paper, we study the price impact of vouchers in this market structure. We first state conditions on demand elasticities that make the choice of vouchers consistent with the regulator's objective of eliminating energy poverty. We then model a game between energy suppliers and the regulator, where suppliers maximize profit while the regulator ensures that no consumer spends more than a given share of income on energy. From a benchmark case without vouchers, we show that vouchers reduce the energy price under simultaneous decision making or when the regulator moves first. However, the price impact of vouchers is ambiguous if firms move first. This scenario's price is above the price of the simultaneous decision scenario's price.

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  • Marion Podesta, Jean-Christophe Poudou, and Michel Roland, 2021. "The Price Impact of Energy Vouchers," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 27-54.
    • Handle: RePEc:aen:journl:ej42-3-podesta
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    Cited by:

    1. Richard S. J. Tol, 2023. "Navigating the energy trilemma during geopolitical and environmental crises," Papers 2301.07671, arXiv.org.

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