Quotation Gugler, Klaus, Schmitt, Stephan, Rammerstorfer, Margarethe. 2011. The Trade-off Between Static and Dynamic Efficiency in Electricity Markets - A Cross Country Study. EARIE, Stockholm, Schweden, 01.09.-03.09.




This paper is the first to explicitly test for the presence of a trade-off between static and dynamic efficiency in a regulated industry, the electricity industry. We show for 16 European countries over the period 1998-2007 that higher electricity end-user prices in a country subsequently lead to higher investments in the capital stock, i.e. in generation, distribution and transmission assets. Moreover, there is a trade-off between vertical economies and competition. Ownership unbundling and forced access to the incumbent transmission grid increase competition but come at the cost of lost vertical economies. Generally, we find that regulation that affect only the market like the stablishment of a wholesale market or free choice of suppliers increase investment activity via spurring competition. Regulation, however, that adversely affects the incumbent directly, like ownership unbundling,decreases aggregate investment spending.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title The Trade-off Between Static and Dynamic Efficiency in Electricity Markets - A Cross Country Study
Year 2011
Date 01.09.-03.09.
Country Sweden
Location Stockholm
URL http://www.earie2011.org/


Gugler, Klaus (Details)
Schmitt, Stephan (Former researcher)
Rammerstorfer, Margarethe (Details)
Research Institute for Regulatory Economics FI (Details)
Department of Economics (Gugler) (Details)
Institute for Finance, Banking and Insurance IN (Details)
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