Quotation Liebensteiner, Mario, Graf, Christoph. 2017. The Effect of Electricity Retail Liberalization on Residential End-use Tariffs. ZEW Research Seminar on Competition and Regulation, Mannheim, 26.01.




In the course of de-regulation and restructuring of European electricity markets, a major task was to liberalize retail markets for end-users. Contrary to the initial situation of having regional monopolist suppliers, liberalized retail markets enables end-users to freely choose their electricity supplier. Yet, it is still an open question whether this (costly) regulatory measure yielded an increase in consumer surplus through a decrease in end-use tariffs. We, thus, investigate the causal effect of retail liberalization on residential tariffs by exploiting tariff data of residential customers in 21 European countries for the annual period 1995-2014. We employ several estimation methods (2SLS, LSDVC, GMM) in order to circumvent issues of bias from path-dependency in dynamic panel models and endogeneity of independent variables. Our results point to a mild and static reduction in residential electricity tariffs of around 2.5% in the year following market liberalization. At the regional level, Central Europe benefited from the market reform, whereas in Eastern Europe tariffs even increased. Moreover, there is some evidence that privatization has a negative impact on tariffs, whereas unbundling has no measurable effect. We also find that investment in renewable capacity increases the taxes directly related to the electricity bill (but not the sole tariffs).


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Unpublished lecture
Language English
Title The Effect of Electricity Retail Liberalization on Residential End-use Tariffs
Event ZEW Research Seminar on Competition and Regulation
Location Mannheim
Date Jan. 26, 2017


Liebensteiner, Mario (Former researcher)
Graf, Christoph (Former researcher)
Department of Economics (Gugler) (Details)
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