The Effect of Electricity Retail Competition on Retail Prices
AbstractCompared to traditional cost-of-service (COS) regulation, electricity retail competition may lead to lower costs but higher markups. Thus, the net effect on electricity retail prices is ambiguous. This paper uses a difference-in-difference approach to estimate the impact. The results suggest that on average, residential customers are better off, commercial customers see no change, and industrial customers are worse off under retail competition, compared to COS regulation. Moreover, rate reductions (if any) are only transitory and mostly driven by aggressive price regulation during the transitional period. Overall, retail competition does not seem to achieve its policy objective of reducing electricity rates.
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Bibliographic InfoPaper provided by University of Alberta, Department of Economics in its series Working Papers with number 2012-21.
Length: 36 pages
Date of creation: 01 Oct 2012
Date of revision:
electricity; restructuring; retail competition; retail price; difference-in-difference;
Find related papers by JEL classification:
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
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- K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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