When Do Pro-Competitive Policies in Electricity Markets Reduce Total Emissions? The Role of Electrification

Yukihide Kurakawa
Additional contact information
Yukihide Kurakawa: Kanazawa Seiryo University

RIEEM Discussion Paper Series from Research Institute for Environmental Economics and Management, Waseda University

Abstract: This study theoretically examines how electricity market structure affects total emissions. We define emissions attributable to imperfect competition, relative to a perfectly competitive benchmark. Im- perfect competition in the electricity market reduces emissions from electricity generation; however, higher prices discourage electrification in end-use sectors and increase the direct use of fossil fuels. When the emission factor of electricity is below a certain threshold, higher prices associated with imperfect competition lead to higher total emissions, whereas the effect reverses when the emission factor exceeds the threshold. This threshold can be indirectly identified through changes in electricity consumption under a carbon tax. These findings indicate that pro-competitive policies can reduce total emissions if (and only if) the emission factor of electricity is sufficiently low; otherwise, they may increase total emissions. Moreover, the emission reduction effect of such policies becomes even stronger as the electricity emission factor decreases.

Keywords: electricity market structure; imperfect competition; electrification; carbon tax; total emissions (search for similar items in EconPapers)
JEL-codes: D40 L13 L94 Q42 Q50 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2026-04
New Economics Papers: this item is included in nep-com
References: Add references at CitEc
Citations:

Downloads: (external link)
https://prj-rieem.w.waseda.jp/dp/dp2601.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:was:dpaper:2601

Access Statistics for this paper

More papers in RIEEM Discussion Paper Series from Research Institute for Environmental Economics and Management, Waseda University
Bibliographic data for series maintained by Takuro Miyamoto ().