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EU electricity market integration and cross-country convergence in residential and industrial end-user prices

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  • Cassetta, Ernesto
  • Nava, Consuelo R.
  • Zoia, Maria Grazia

Abstract

Despite significant efforts in market integration and regulatory harmonization, large heterogeneities in retail electricity prices across Member States still remain one of the main concerns of the European Union. Here, the cross-country convergence of households and industrial end-user electricity prices in the EU between 2008 and 2021 is investigated. Relying on the notion of club convergence, empirical findings reveal the existence of multiple clubs. The household and non-household market segments exhibit rather different paths in terms of price convergence. Domestic end-user prices show higher dispersion and heterogeneity across national electricity markets than industrial one. Differences across convergence clubs seem to be related with public intervention in the electricity end-user price setting, disparities in the range of household or industrial consumers under regulated end-user prices, and different criteria used among countries in defining energy components. Policy-wise, the club convergence analysis emphasizes the need of stronger cooperation for public intervention and regulation, while considering how end-user price setting can support the decarbonization of the EU electricity systems.

Suggested Citation

  • Cassetta, Ernesto & Nava, Consuelo R. & Zoia, Maria Grazia, 2022. "EU electricity market integration and cross-country convergence in residential and industrial end-user prices," Energy Policy, Elsevier, vol. 165(C).
    • Handle: RePEc:eee:enepol:v:165:y:2022:i:c:s0301421522001598
    DOI: 10.1016/j.enpol.2022.112934
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    More about this item

    Keywords

    Retail price; Electricity; Market integration; Club convergence; European union;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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