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Market Structure and the Pricing of Electricity and Natural Gas

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  • Christopher R. Knittel

Abstract

US Electricity and natural gas markets have traditionally been serviced by one of two market structures. In some markets, electricity and natural gas are sold by a regulated dual‐product monopolist, while in other markets, electricity and natural gas are sold by separate regulated single‐product monopolies. I analyze whether electricity and natural gas prices depend on the market structure and compare these results to the predictions of a number of theories. The results are most consistent with the political economy theories suggesting that regulators respond to interest group activity.

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  • Christopher R. Knittel, 2003. "Market Structure and the Pricing of Electricity and Natural Gas," Journal of Industrial Economics, Wiley Blackwell, vol. 51(2), pages 167-191, June.
    • Handle: RePEc:bla:jindec:v:51:y:2003:i:2:p:167-191
    DOI: 10.1111/1467-6451.00197
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    Cited by:

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    2. Severin Borenstein & Lucas W. Davis, 2012. "The Equity and Efficiency of Two-Part Tariffs in U.S. Natural Gas Markets," Journal of Law and Economics, University of Chicago Press, vol. 55(1), pages 75-128.
    3. Carlos Perez Montes, 2012. "Regulatory bias in the price structure of local telephone services," Working Papers 1201, Banco de España.
    4. Lucas W. Davis & Erich Muehlegger, 2010. "Do Americans consume too little natural gas? An empirical test of marginal cost pricing," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 791-810, December.
    5. Russell Smyth & Magnus Söderberg, 2010. "Public interest versus regulatory capture in the Swedish electricity market," Journal of Regulatory Economics, Springer, vol. 38(3), pages 292-312, December.
    6. Catherine Hausman, 2019. "Shock Value: Bill Smoothing and Energy Price Pass‐Through," Journal of Industrial Economics, Wiley Blackwell, vol. 67(2), pages 242-278, June.
    7. Flavio Menezes & Magnus Söderberg & Miguel Santolino, 2012. "Regulatory behaviour under threat of court reversal," Discussion Papers Series 472, School of Economics, University of Queensland, Australia.
    8. Flavio M. Menezes & Christian Roessler, 2010. "Good and Bad Consistency in Regulatory Decisions," The Economic Record, The Economic Society of Australia, vol. 86(275), pages 504-516, December.
    9. Pérez Montes, Carlos, 2013. "Regulatory bias in the price structure of local telephone service," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 462-476.
    10. Söderberg, Magnus & Menezes, Flavio M. & Santolino, Miguel, 2018. "Regulatory behaviour under threat of court reversal: Theory and evidence from the Swedish electricity market," Energy Economics, Elsevier, vol. 71(C), pages 302-310.
    11. M. Florio & Rinaldo Brau & R. Doronzo, 2008. "Gas industry reforms and consumers' prices in the European Union," Working Paper CRENoS 200816, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    12. Sebitosi, A.B. & Okou, R., 2010. "Re-thinking the power transmission model for sub-Saharan Africa," Energy Policy, Elsevier, vol. 38(3), pages 1448-1454, March.
    13. Brkic, Dejan, 2009. "Serbian gas sector in the spotlight of oil and gas agreement with Russia," Energy Policy, Elsevier, vol. 37(5), pages 1925-1938, May.
    14. Ryan P. Scott & Tyler A. Scott & Robert A. Greer, 2022. "Who owns the pipes? Utility ownership, infrastructure conditions, and methane emissions in United States natural gas distribution," Review of Policy Research, Policy Studies Organization, vol. 39(2), pages 170-198, March.
    15. Magnus Söderberg, 2010. "Informal Benchmarks as a Source of Regulatory Threat in Unregulated Utility Sectors," CESifo Working Paper Series 2973, CESifo.
    16. Debora Di Gioacchino, 2008. "Strategic technology choice in regulated markets with demand uncertainty," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(2), pages 145-164, April.

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