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Charges, Costs and Market Power: the Deregulated UK Electricity Retail Market

Evens Salies () and Catherine WADDAMS Price
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Catherine WADDAMS Price: University of East Anglia

Industrial Organization from EconWPA

Abstract: The residential UK electricity market was opened for the first time in 1999, introducing choice of supplier, and about 40% of households changed supplier in the first four years. After three years price caps were removed. We review this process and assess the competitiveness of the market by examining how the charges levied by suppliers depend on cost and demand factors for three different payment methods and consumption levels. We also identify signs of additional market power of incumbency and the effect of levying a tariff with no fixed charge. We find that both cost and demand factors affect charges, and the relationship varies for different payment methods and consumption levels; and that tariffs with no fixed element have different effects for different payment methods. We also conclude that considerable market power seems to remain with potentially adverse distributional effects.

Keywords: Energy retail; Pricing; Seemingly Unrelated Regression Equations (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2005-08-10
Note: Type of Document - pdf; pages: 23
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Related works:
Journal Article: Charges, Costs and Market Power: the Deregulated UK Electricity Retail Market (2004) Downloads
Working Paper: Charges, Costs and Market Power: the Deregulated UK Electricity Retail Market (2004) Downloads
Working Paper: Charges, Costs and Market Power: the Deregulated UK Electricity Retail Market (2004) Downloads
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