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Alternative policies for the liberalization of retail electricity markets in Chile

Sebastián Palacios M. and Eduardo Saavedra ()

Utilities Policy, 2017, vol. 49, issue C, 72-92

Abstract: This article shows that the liberalization of the residential market for electricity in Chile may achieve important welfare gains. We built a model to assess two policy scenarios: partial and full liberalization. Simulations of the model provide equilibrium prices, the distribution toll, and welfare estimations on factual and counterfactual scenarios. Our policy recommendation is to partially liberalize the residential market for electricity. That is, to allow the entrance into this market but regulate both the incumbent's tariffs for residential customers and the distribution toll. Full liberalization, in which only the distribution toll is regulated, produces a lower increase in welfare.

Keywords: Liberalization; Retail electricity; Welfare (search for similar items in EconPapers)
JEL-codes: L13 L43 L51 L94 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:juipol:v:49:y:2017:i:c:p:72-92