The welfare consequences of tariff rebalancing in the domestic gas market
The domestic energy markets in the United Kingdom are still in a process of structural change. Earlier this year, limited competition for the supply of household domestic gas was introduced, with full-scale competition expected to develop in the next few years. Competition for the supply of electricity to households is expected to begin in 1998. The introduction of competition in the supply of these energy goods will force tariffs to become more cost-reflective. Until now, maintaining crosssubsidies between consumer groups has not posed any difficulties, given that the suppliers of electricity as well as British Gas have enjoyed monopoly concessions. Profits lost by subsidising one group of consumers have been compensated by higher price-over-cost margins for other groups. Competition is likely to change this. New entrants will try to target market segments where current prices are above supply costs and will have no incentive to supply groups where costs are above prices. To survive, incumbents — who have universal services obligations — will be forced to end internal cross-subsidies.
Volume (Year): 17 (1996)
Issue (Month): 4 (November)
|Contact details of provider:|| Postal: |
Phone: (+44) 020 7291 4800
Fax: (+44) 020 7323 4780
Web page: http://www.ifs.org.ukEmail:
More information through EDIRC
|Order Information:|| Postal: The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE|
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.:
- Baker, Paul & Blundell, Richard & Micklewright, John, 1989. "Modelling Household Energy Expenditures Using Micro-data," Economic Journal, Royal Economic Society, vol. 99(397), pages 720-38, September.
- Ruth Hanncock & Catherine Waddams Price, . "Competition in the British Domestic Gas Market: Efficiency and Equity," Discussion Papers in Public Sector Economics 95/1, Department of Economics, University of Leicester.
- Meghir, Costas & Robin, Jean-Marc, 1992.
"Frequency of purchase and the estimation of demand systems,"
Journal of Econometrics,
Elsevier, vol. 53(1-3), pages 53-85.
- Costas Meghir & Jean-Marc Robin, 1992. "Frequency of purchase and the estimation of demand systems," Working Papers 249971, Institut National de la Recherche Agronomique, France.
- James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
- Richard Schmalensee, 1981.
"Monopolistic Two-Part Pricing Arrangements,"
Bell Journal of Economics,
The RAND Corporation, vol. 12(2), pages 445-466, Autumn.
- Ruth Hancock & Catherine Waddams Price, 1995. "Competition in the British domestic gas market: efficiency and equity," Fiscal Studies, Institute for Fiscal Studies, vol. 16(3), pages 81-105, August.
- Philip Burns & Ian Crawford & Andrew Dilnot, 1995. "Regulation and redistribution in utilities," Fiscal Studies, Institute for Fiscal Studies, vol. 16(4), pages 1-22, January.
- Moffitt, Robert, 1990. "The Econometrics of Kinked Budget Constraints," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 119-39, Spring.
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-61, January.
When requesting a correction, please mention this item's handle: RePEc:ifs:fistud:v:17:y:1996:i:4:p:49-65. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephanie Seavers)
If references are entirely missing, you can add them using this form.