Vertical Disintegration in the European Electricity Sector: Empirical Evidence on Lost Synergies

Klaus Gugler (), Mario Liebensteiner () and Stephan Schmitt

No 190, Department of Economics Working Paper Series from WU Vienna University of Economics and Business

Abstract: The EU has been promoting unbundling of the transmission grid from other stages of the electricity supply chain with the aim of fostering competition in the upstream stage of electricity generation. At presence, ownership unbundling is the predominant form of unbundling in Europe. However, the benefits of increased competition from ownership unbundling of the transmission grid may come at the cost of lost vertical synergies between the formerly integrated stages of electricity supply. The policy debate generally neglects such potential costs of unbundling, yet concentrates on its benefits. Therefore European cross-country evidence may shed some light on this issue. This study helps fill this void by empirically estimating the magnitude of economies of vertical integration (EVI) between electricity generation and transmission based on a quadratic cost function. For this purpose we employ novel firm-level panel data of major European electricity utilities. Our results confirm the presence of substantial EVI, which put the policy measure of transmission ownership unbundling into question. (authors' abstract)

Keywords: Cost function; Economies of Scope; Ownership Unbundling; Vertical Integration; Europäische Union; Elektrizitätswirtschaft; Entflechtung; Kosten; Kostenfunktion (search for similar items in EconPapers)
Date: 2014-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://epub.wu.ac.at/4360/ original version (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (https://epub.wu.ac.at/4360/ [308 PERMANENT REDIRECT]--> https://epub.wu.ac.at/id/eprint/4360 [302 FOUND]--> https://research.wu.ac.at/en/publications/b1df9586-cf6b-48a3-8f43-e866fbe328c0)

Related works:
Journal Article: Vertical disintegration in the European electricity sector: Empirical evidence on lost synergies (2017)
Working Paper: Vertical Disintegration in the European Electricity Sector: Empirical Evidence on Lost Synergies (2014)
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:wiw:wus005:4360

Access Statistics for this paper

More papers in Department of Economics Working Paper Series from WU Vienna University of Economics and Business Welthandelsplatz 1, 1020 Vienna, Austria.
Bibliographic data for series maintained by WU Library ().