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Alternative policies for the liberalization of retail electricity markets in Chile

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  • Palacios M., Sebastián
  • Saavedra P., Eduardo

Abstract

This article shows that the liberalization of the residential market for electricity in Chile may achieve important welfare gains. We built a model to assess two policy scenarios: partial and full liberalization. Simulations of the model provide equilibrium prices, the distribution toll, and welfare estimations on factual and counterfactual scenarios. Our policy recommendation is to partially liberalize the residential market for electricity. That is, to allow the entrance into this market but regulate both the incumbent's tariffs for residential customers and the distribution toll. Full liberalization, in which only the distribution toll is regulated, produces a lower increase in welfare.

Suggested Citation

  • Palacios M., Sebastián & Saavedra P., Eduardo, 2017. "Alternative policies for the liberalization of retail electricity markets in Chile," Utilities Policy, Elsevier, vol. 49(C), pages 72-92.
    • Handle: RePEc:eee:juipol:v:49:y:2017:i:c:p:72-92
    DOI: 10.1016/j.jup.2017.06.009
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    References listed on IDEAS

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    Cited by:

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    2. Humberto Verdejo-Fredes & Fernando García-Muñoz & Francisco Tobar & Cristhian Becker & Mauricio Olivares & Juan Zolezzi & Guillermo Guzmán, 2022. "Retail Electricity Market Liberalization: An Overview of International Experience and Effects on the Chilean Regulated Tariff," Sustainability, MDPI, vol. 14(21), pages 1-21, October.
    3. Javier Bustos-Salvagno & Fernando Fuentes H., 2017. "Electricity Interconnection in Chile: Prices versus Costs," Energies, MDPI, vol. 10(9), pages 1-17, September.
    4. Athanasios Dagoumas & Nikolaos Koltsaklis, 2020. "Zonal Pricing in Kazakhstan Power System with a Unit Commitment Model," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 24-36.

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    More about this item

    Keywords

    Liberalization; Retail electricity; Welfare;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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