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Empirical analysis of how political ideology and ownership influence price stability in the Swedish district heating market

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  • Biggar, Darryl
  • Söderberg, Magnus

Abstract

It is known that regulators and customers value stable prices in monopolised energy markets. The purpose of this paper is to investigate what factors influence local energy distributors to care about, and seek to implement, stable prices. Because the literature has suggested that ownership and political ideology affect monopoly pricing behaviour, we pay particular attention to ideological and ownership heterogeneity across a large number of local jurisdictions in Sweden. Specifically, this paper investigates two different pricing aspects; first, actual pricing behaviour in the unregulated Swedish district heating market and, second, survey data where the district heating firms report how important they think price stability is for their level of competitiveness. The results show that district heating firms that operate in municipalities with a left-wing government (i) implement actual prices that follow the long-term price path to a larger extent and (ii) state that smoothed prices are more important for their level of competitiveness. Results are both statistically and economically significant at conventional levels.

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  • Biggar, Darryl & Söderberg, Magnus, 2020. "Empirical analysis of how political ideology and ownership influence price stability in the Swedish district heating market," Energy Policy, Elsevier, vol. 145(C).
    • Handle: RePEc:eee:enepol:v:145:y:2020:i:c:s0301421520304821
    DOI: 10.1016/j.enpol.2020.111759
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    Cited by:

    1. Biggar, Darryl, 2022. "Seven outstanding issues in energy network regulation," Energy Economics, Elsevier, vol. 115(C).
    2. Egüez, Alejandro, 2021. "District heating network ownership and prices: The case of an unregulated natural monopoly," Utilities Policy, Elsevier, vol. 72(C).
    3. Boscan, Luis & Söderberg, Magnus, 2021. "A theoretical and empirical analysis of district heating cost in Denmark," Energy Economics, Elsevier, vol. 99(C).
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    More about this item

    Keywords

    Price behaviour; Political ideology; Monopoly; District heating; Sweden;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General

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