From Liberalization Towards Integration: Have Markups of EU Electricity Firms Changed?
AbstractThis paper presents an ex-post empirical analysis of the impact of European electricity mar- ket reforms on markups of rms. The working hypothesis is that further economic integration would bring competition into electricity markets re ected by lower markups of electricity rms. The results show that reforms have gradually reduced the markups, but the markup premium of incumbent rms is on average larger than theoretical models would predict under e ective economic integration. Considering regional proximity and heterogeneity of rms along the supply chain, the results suggest that better market access and cross-border arbitrage disci- plined the markups, but have not led to competitive market outcomes due to prevailing market concentration and insufficient unbundling of transmission and distribution channels.
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Bibliographic InfoPaper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 26110.
Date of creation: 2010
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Economic integration; electricity rms; EU; price-cost margins; service market regulation;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-04 (All new papers)
- NEP-ENE-2010-06-04 (Energy Economics)
- NEP-EUR-2010-06-04 (Microeconomic European Issues)
- NEP-REG-2010-06-04 (Regulation)
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