The effect of regulatory scrutiny: Asymmetric cost pass-through in power wholesale and its end

Frieder Mokinski and Nikolas Wölfing

Journal of Regulatory Economics, 2014, vol. 45, issue 2, 175-193

Abstract: We find an asymmetric pass-through of European emission allowance (EUA) prices to wholesale electricity prices in Germany and show that this asymmetry disappeared in response to a report on investigations by the competition authority. The asymmetric pricing pattern, however, was not detected at the time of the report, nor had it been part of the investigations. Our results therefore provide evidence for the deterring effect of regulatory monitoring on firms which exhibit non-competitive pricing behavior. We do not find any asymmetric pass-through of EUA prices in recent years. Several robustness checks support our results. Copyright Springer Science+Business Media New York 2014

Keywords: Asymmetric price adjustment; Regulatory monitoring; Wholesale electricity markets; Emissions trading; L4; L94; Q41; Q52 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:regeco:v:45:y:2014:i:2:p:175-193

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DOI: 10.1007/s11149-013-9233-8

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