IDEAS home Printed from https://ideas.repec.org/p/gmf/wpaper/2014-13..html
   My bibliography  Save this paper

Drivers for Household Electricity Prices in the EU: A System-GMM Panel Data Approach

Author

Listed:
  • Patrícia Pereira da Silva

    (Faculty of Economics, University of Coimbra and INESC Coimbra, Portugal)

  • Pedro Cerqueira

    (Faculty of Economics, University of Coimbra and GEMF, Portugal)

Abstract

Electricity as well as gas or refined petroleum products exemplify a significant part of the consumer basket of European households and companies. As energy products are important inputs of nearly all final goods and services, any change of energy prices has a direct impact of the general price level. In this context, the main purpose of this study is to assess the main drivers of household electricity prices in the European Union (EU), throughout a period of deep sector transformation. Relying on Eurostat up to date data, not only we analyze the long-term evolution of household electricity prices across the EU, but also we provide the latest empirical evidence on their determinants while confronting the results with the EU energy policy path. For this purpose a new approach is herein developed based on a dynamic model with panel data through GMM proposal method by Blundell and Bond (1998) with the Windermeijer correction (2005). The data analysis provides grounds for a relation between the variable of household electricity prices with variables related to sector liberalization, renewable energy sources which support the EU policy to boost liberalization. This study offers evidence that the sector liberalization, herein assumed via the market share of the largest electricity producer, is accompanied by a decreasing trend in prices, which is consistent with the European Commission’s objectives to liberalize.

Suggested Citation

  • Patrícia Pereira da Silva & Pedro Cerqueira, 2014. "Drivers for Household Electricity Prices in the EU: A System-GMM Panel Data Approach," GEMF Working Papers 2014-13, GEMF, Faculty of Economics, University of Coimbra.
    • Handle: RePEc:gmf:wpaper:2014-13.
    as

    Download full text from publisher

    File URL: https://repec.uc.pt/gmf/wpaper/wpgemf/gemf_2014-13.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hattori, Toru & Tsutsui, Miki, 2004. "Economic impact of regulatory reforms in the electricity supply industry: a panel data analysis for OECD countries," Energy Policy, Elsevier, vol. 32(6), pages 823-832, April.
    2. Amorim, F. & Vasconcelos, J. & Abreu, I.C. & Silva, P.P. & Martins, V., 2013. "How much room for a competitive electricity generation market in Portugal?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 18(C), pages 103-118.
    3. François Coppens & David Vivet, 2006. "The single European electricity market: A long road to convergence," Working Paper Document 84, National Bank of Belgium.
    4. Bruno, Giovanni S.F., 2005. "Approximating the bias of the LSDV estimator for dynamic unbalanced panel data models," Economics Letters, Elsevier, vol. 87(3), pages 361-366, June.
    5. Pollitt, Michael, 2009. "Evaluating the evidence on electricity reform: Lessons for the South East Europe (SEE) market," Utilities Policy, Elsevier, vol. 17(1), pages 13-23, March.
    6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    7. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    8. Faye Steiner, 2003. "Regulation, industry structure and performance in the electricity supply industry," OECD Economic Studies, OECD Publishing, vol. 2001(1), pages 143-182.
    9. Marcelo Soto, 2009. "System GMM Estimation With A Small Sample," UFAE and IAE Working Papers 780.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    10. Fiorio, Carlo V. & Florio, Massimo, 2011. "«Would you say that the price you pay for electricity is fair?» Consumers' satisfaction and utility reforms in the EU15," Energy Economics, Elsevier, vol. 33(2), pages 178-187, March.
    11. repec:dau:papers:123456789/7730 is not listed on IDEAS
    12. Nagayama, Hiroaki, 2007. "Effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries," Energy Policy, Elsevier, vol. 35(6), pages 3440-3462, June.
    13. Paul L. Joskow, 2008. "Lessons Learned from Electricity Market Liberalization," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 9-42.
    14. Nagayama, Hiroaki, 2009. "Electric power sector reform liberalization models and electric power prices in developing countries: An empirical analysis using international panel data," Energy Economics, Elsevier, vol. 31(3), pages 463-472, May.
    15. Jamasb, T. & Newbery, D. & Pollitt, M., 2004. "'Core Indicators for Determinants and Performance of Electricity Sector in Developing Countries’," Cambridge Working Papers in Economics 0438, Faculty of Economics, University of Cambridge.
    16. Carlos J. Pereira Freitas & Patrícia Pereira Da Silva, 2013. "Evaluation of dynamic pass-through of carbon prices into electricity prices - a cointegrated VECM analysis," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 9(1/2), pages 65-85.
    17. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. da Silva, Patrícia Pereira & Cerqueira, Pedro A., 2017. "Assessing the determinants of household electricity prices in the EU: a system-GMM panel data approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 1131-1137.
    2. Hyland, Marie, 2016. "Restructuring European electricity markets – A panel data analysis," Utilities Policy, Elsevier, vol. 38(C), pages 33-42.
    3. Erdogdu, Erkan, 2011. "The impact of power market reforms on electricity price-cost margins and cross-subsidy levels: A cross country panel data analysis," Energy Policy, Elsevier, vol. 39(3), pages 1080-1092, March.
    4. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    5. Erdogdu, Erkan, 2014. "Investment, security of supply and sustainability in the aftermath of three decades of power sector reform," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 1-8.
    6. Christian Growitsch & Marcus Stronzik, 2014. "Ownership unbundling of natural gas transmission networks: empirical evidence," Journal of Regulatory Economics, Springer, vol. 46(2), pages 207-225, October.
    7. Kaller, Alexander & Bielen, Samantha & Marneffe, Wim, 2018. "The impact of regulatory quality and corruption on residential electricity prices in the context of electricity market reforms," Energy Policy, Elsevier, vol. 123(C), pages 514-524.
    8. Erkan Erdogdu, 2014. "The Political Economy of Electricity Market Liberalization: A Cross-country Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    9. Bastianin, Andrea & Castelnovo, Paolo & Florio, Massimo, 2018. "Evaluating regulatory reform of network industries: a survey of empirical models based on categorical proxies," Utilities Policy, Elsevier, vol. 55(C), pages 115-128.
    10. George E. Halkos & Apostolos S. Tsirivis, 2023. "Electricity Prices in the European Union Region: The Role of Renewable Energy Sources, Key Economic Factors and Market Liberalization," Energies, MDPI, vol. 16(6), pages 1-20, March.
    11. Pollitt, Michael G., 2012. "The role of policy in energy transitions: Lessons from the energy liberalisation era," Energy Policy, Elsevier, vol. 50(C), pages 128-137.
    12. Andrea Bastianin & Paolo Castelnovo & Massimo Florio, 2017. "The Empirics of Regulatory Reforms Proxied by Categorical Variables: Recent Findings and Methodological Issues," Working Papers 2017.22, Fondazione Eni Enrico Mattei.
    13. Kathuria, Vinish, 2021. "Impact of institutional reforms on the performance of distribution utilities in India – A dynamic panel data analysis," Energy Policy, Elsevier, vol. 158(C).
    14. Baharumshah, Ahmad Zubaidi & Slesman, Ly & Wohar, Mark E., 2016. "Inflation, inflation uncertainty, and economic growth in emerging and developing countries: Panel data evidence," Economic Systems, Elsevier, vol. 40(4), pages 638-657.
    15. Donatella Saccone, 2021. "Can the Covid19 pandemic affect the achievement of the ‘Zero Hunger’ goal? Some preliminary reflections," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(7), pages 1025-1038, September.
    16. Nepal, Rabindra & Jamasb, Tooraj, 2012. "Reforming the power sector in transition: Do institutions matter?," Energy Economics, Elsevier, vol. 34(5), pages 1675-1682.
    17. Tooraj Jamasb & Rabindra Nepal & Govinda Timilsina & Michael Toman, 2014. "Energy Sector Reform, Economic Efficiency and Poverty Reduction," Discussion Papers Series 529, School of Economics, University of Queensland, Australia.
    18. Ibrahim, Mansor H. & Salim, Kinan & Abojeib, Moutaz & Yeap, Lau Wee, 2019. "Structural changes, competition and bank stability in Malaysia’s dual banking system," Economic Systems, Elsevier, vol. 43(1), pages 111-129.
    19. Dombi, Ákos & Grigoriadis, Theocharis, 2020. "State history and the finance-growth nexus: Evidence from transition economies," Economic Systems, Elsevier, vol. 44(1).
    20. Marson, Marta & Migheli, Matteo & Saccone, Donatella, 2022. "Free to Die: Economic Freedoms and Influenza Mortality," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202210, University of Turin.

    More about this item

    Keywords

    household electricity prices; market reform; system-GMM panel data model.;
    All these keywords.

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gmf:wpaper:2014-13.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sofia Antunes (email available below). General contact details of provider: https://edirc.repec.org/data/cebucpt.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.