From Liberalization Towards Integration: Have Markups of EU Electricity Firms Changed?

Ziga Zarnic

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

Abstract: This paper presents an ex-post empirical analysis of the impact of European electricity mar- ket reforms on markups of rms. The working hypothesis is that further economic integration would bring competition into electricity markets re ected by lower markups of electricity rms. The results show that reforms have gradually reduced the markups, but the markup premium of incumbent rms is on average larger than theoretical models would predict under e ective economic integration. Considering regional proximity and heterogeneity of rms along the supply chain, the results suggest that better market access and cross-border arbitrage disci- plined the markups, but have not led to competitive market outcomes due to prevailing market concentration and insufficient unbundling of transmission and distribution channels.

Keywords: Economic integration; electricity rms; EU; price-cost margins; service market regulation (search for similar items in EconPapers)
JEL-codes: F10 L11 L51 L94 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-ene, nep-eur and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:lic:licosd:26110

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