The Gas Price Brake Increases Gas Prices: Empirical Evidence

Lukas Brunninger, Markus Dertwinkel-Kalt, Klaus Gugler and Sven Heim

No 19763, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In the aftermath of the Russian invasion in Ukraine and rising gas prices, the ``gas price brake'' was implemented in Germany. We employ a difference-in-differences approach and analyze data on offered gas contracts from two countries with comparable gas markets, where one country (Germany) has implemented the gas price brake and the other (Austria) has not. Our findings support the theoretical prediction, indicating that the gas price brake led to an increase in total annual gas costs in Germany. This increase is entirely attributable to incumbents increasing counterfactual gas prices by up to 90\%. Non-incumbents do not ’milk‘ the brake.

Keywords: Energy policy; Gas Price Brake; Moral hazard; Incumbents (search for similar items in EconPapers)
JEL-codes: D04 L50 Q40 Q48 (search for similar items in EconPapers)
Date: 2024-12
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