Quotation Gugler, Klaus, Liebensteiner, Mario, Schmitt, Stephan. 2017. Vertical disintegration in the European electricity sector: Empirical evidence on lost synergies. International Journal of Industrial Organization 52, 450-478.




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 present, ownership unbundling is the predominant form of unbundling in Europe. From a policy perspective, a successful unbundling regime would require that the benefits of increased competition in power generation would at least offset the associated efficiency losses from vertical divestiture. Since evidence on this topic is scarce, 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 unique firm-level panel data of European electricity utilities. Our results confirm the presence of substantial EVI of 14% for the median sized integrated utility. Moreover, EVI tend to increase with firm size.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal International Journal of Industrial Organization
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, STRAT-B, VW-B, WH-B
Language English
Title Vertical disintegration in the European electricity sector: Empirical evidence on lost synergies
Volume 52
Year 2017
Page from 450
Page to 478
Reviewed? Y
URL http://www.sciencedirect.com/science/article/pii/S0167718717302564
DOI http://dx.doi.org/10.1016/j.ijindorg.2017.04.002
JEL L22; L25; L51; Q48


Gugler, Klaus (Details)
Liebensteiner, Mario (Former researcher)
Schmitt, Stephan (WIK-Consult, Germany)
Research Institute for Regulatory Economics FI (Details)
Department of Economics (Gugler) (Details)
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