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Tariffs time-dynamics in competitive electricity retail markets with differentiated consumer reactions

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  • Ancel, Julien

Abstract

Time-varying retail tariffs play a key role in activating demand-side flexibility in power systems. In retail markets, such tariffs compete with constant-in-time, or flat, tariffs. We investigate how the coexistence of these two tariff types influences their respective pricing levels and adoption rates among a diverse consumer base. To this end, we propose a multi-leader–followers model featuring a continuum of consumers characterized by their penalization of responding to price changes at the lower level and two competing retailers at the upper level. One retailer offers a time-varying tariff and the other a flat one. We derive the equilibria of the retail market under various assumptions about each retailer’s responsiveness to the other’s decisions, and compare the outcomes with those under a regulated monopolist retailer. We then provide a numerical application of the results based on the French electricity retail market.

Suggested Citation

  • Ancel, Julien, 2025. "Tariffs time-dynamics in competitive electricity retail markets with differentiated consumer reactions," Energy Economics, Elsevier, vol. 148(C).
    • Handle: RePEc:eee:eneeco:v:148:y:2025:i:c:s0140988325004426
    DOI: 10.1016/j.eneco.2025.108615
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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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