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Liberalization of electricity retailing in Europe: coming back or going forth?

  • Silvia Concettini

    (Universita degli Studi di Milano - [-], Université Paris Ouest Nanterre La Défense - [-])

  • Anna Créti

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, Université Paris Dauphine - [-])

The aim of this article is to provide a mid-term evaluation of liberalization of electricity retailing in Europe taking into account some relevant analytic con- straints: di erent and often conflicting theoretical points of view, shortage of routinely collected data, problems in isolating the impact of single reforms in power sector and pervasive regulatory interventions. Theoretical approaches and empirical studies are discussed with the goal of testing the consistency of theory and practice. Our analysis suggests that direct bene ts of retail competition have been often overstated, particularly for small and residential customers. Final market has proven to be less dynamic than forecast and new entry in supply more di cult to sustain in the medium-long run. Regulatory requirements are demonstrated to be more signi cant than suggested in previous papers, due to non-negligible market imperfections. Our main conclusion is that it seems unlikely that \light-handed regulation" may fully substitute for \hard regulation" in this sector, especially for small and residential customers. Moreover, direct regulatory interventions remain essential for arranging and managing Default and Last Resort services and avoiding the risk of excluding \vulnerable customers" from trade. In the light of this limitations, further actions appear to be required to give a thorough organization to this business able to let expected outcomes of other related reforms (e.g. liberalization of generation) a stronger impact on nal customers' welfare.

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Date of creation: 09 Dec 2013
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Handle: RePEc:hal:wpaper:hal-00915924
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  11. Chone, Philippe & Flochel, Laurent & Perrot, Anne, 2002. "Allocating and funding universal service obligations in a competitive market," International Journal of Industrial Organization, Elsevier, vol. 20(9), pages 1247-1276, November.
  12. Pouyet, Jérôme & Sanin, Maria Eugenia & Creti, Anna, 2013. "The NOME Law: Implications for the French Electricity Market," Economics Papers from University Paris Dauphine 123456789/12068, Paris Dauphine University.
  13. Chris Wilson & Catherine Waddams Price, 2007. "Do Consumers Switch to the Best Supplier?," Working Papers 07-6, Centre for Competition Policy, University of East Anglia.
  14. Newbery, David M & Pollitt, Michael G, 1997. "The Restructuring and Privatization of Britain's CEGB--Was It Worth It?," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 269-303, September.
  15. 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.
  16. Philippe Chone & Laurent Flochel & Anne Perrot, 2000. "Allocating and Funding Universal Service Obligations in a Competitive Network Market," Econometric Society World Congress 2000 Contributed Papers 0213, Econometric Society.
  17. Monica Giulietti & Jesus Otero & Michael Waterson, 2010. "Pricing behaviour under competition in the UK electricity supply industry," Oxford Economic Papers, Oxford University Press, vol. 62(3), pages 478-503, July.
  18. Pollitt, M, 2007. "Liberalisation and Regulation in Electricity Systems: How can we get the balance right?," Cambridge Working Papers in Economics 0753, Faculty of Economics, University of Cambridge.
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  23. Klemperer, Paul, 1995. "Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 515-39, October.
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