Welfare effects of vertical integration in energy distribution

Mark Lijesen

No 43, CPB Memorandum from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: This paper analyses the welfare effects of vertical integration of networks and trade in energy markets. Vertical integration reduces the effect of double marginalisation, thus increasing welfare. On the other hand, vertical integration hinders equal competition, rendering the vertically integrated supplier a competitive advantage.We find that the net effect of vertical integration is beneficial to welfare if firms are symmetric, but the effect is ambiguous in the probably more relevant situation where the non-network firm has a cost advantage.

JEL-codes: D43 L13 L22 L94 L95 Q41 (search for similar items in EconPapers)
Date: 2002-07
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:cpb:memodm:43

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