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Competition and Competition Policy in the Austrian Electricity Market. A Critical Review Four Years after Market Liberalisation

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  • Michael Böheim

    (WIFO)

Abstract

Electricity market liberalisation introduced in Austria four years ago initially brought the expected price reductions for both small and large users of electricity – but not more competition. Due to unresolved homemade structural problems, liberalisation has left incumbent electricity suppliers largely unchallenged in their comfortable position as local monopolists. Mergers of public utilities together with existing cross-shareholdings have contributed to a substantial increase of the market power of incumbents, thereby putting the economic benefits from market liberalisation seriously at risk. A programme to stimulate competition is recommended to accelerate the long-delayed legal "unbundling" and institute a thorough review of the strategic alliances in the Austrian electricity sector.

Suggested Citation

  • Michael Böheim, 2005. "Competition and Competition Policy in the Austrian Electricity Market. A Critical Review Four Years after Market Liberalisation," Austrian Economic Quarterly, WIFO, vol. 10(4), pages 150-167, December.
  • Handle: RePEc:wfo:wquart:y:2005:i:4:p:150-167
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    1. Justus Haucap & Jörn Kruse, 2004. "Verdrängungspreise auf Telekommunikationsmärkten?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 5(3), pages 337-361, August.
    2. Green, Richard J, 1996. "Increasing Competition in the British Electricity Spot Market," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 205-216, June.
    3. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    4. Bolle, Friedel, 1992. "Supply function equilibria and the danger of tacit collusion : The case of spot markets for electricity," Energy Economics, Elsevier, vol. 14(2), pages 94-102, April.
    5. Green, Richard J & Newbery, David M, 1992. "Competition in the British Electricity Spot Market," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 929-953, October.
    6. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-1277, November.
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