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Charges, Costs and Market Power: the Deregulated UK Electricity Retail Market

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Author Info
Evens SALIES (The City University)
Catherine WADDAMS PRICE (University of East Anglia)
Abstract

The residential UK electricity market was opened for the first time in 1999, introducing choice of supplier, and about 40% of households changed supplier in the first four years. After three years price caps were removed. We review this process and assess the competitiveness of the market by examining how the charges levied by suppliers depend on cost and demand factors for three different payment methods and consumption levels. We also identify signs of additional market power of incumbency and the effect of levying a tariff with no fixed charge. We find that both cost and demand factors affect charges, and the relationship varies for different payment methods and consumption levels; and that tariffs with no fixed element have different effects for different payment methods. We also conclude that considerable market power seems to remain with potentially adverse distributional effects.

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File URL: http://129.3.20.41/eps/io/papers/0508/0508010.pdf
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Publisher Info
Paper provided by EconWPA in its series Industrial Organization with number 0508010.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 23 pages
Date of creation: 10 Aug 2005
Date of revision:
Handle: RePEc:wpa:wuwpio:0508010

Note: Type of Document - pdf; pages: 23
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Web page: http://129.3.20.41

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Related research
Keywords: Energy retail; Pricing; Seemingly Unrelated Regression Equations;

Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Monica Giulietti & Catherine Waddams Price & Michael Waterson, 2005. "Consumer Choice and Competition Policy: a Study of UK Energy Markets," Economic Journal, Royal Economic Society, vol. 115(506), pages 949-968, October. [Downloadable!] (restricted)
  2. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
  3. Fudenberg, Drew & Tirole, Jean, 1984. "The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry Look," American Economic Review, American Economic Association, vol. 74(2), pages 361-66, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Evens SALIES, 2005. "The effect on retail charges of mergers in the GB electricity market," Econometrics 0506001, EconWPA. [Downloadable!]
  2. Evens Salies, 2006. "Mergers in the GB electricity market: effects on retail charges," Documents de Travail de l'OFCE 2006-08, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
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This page was last updated on 2009-12-9.

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