Quotation Duso, Tomaso, Szücs, Florian. 2017. Market power and heterogeneous pass-through in German electricity retail. European Economic Review 98, 354-372.


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Abstract

We analyze the pass-through of cost changes to retail tariffs in the German electricity market over the 2007–2014 period. We find an average pass-through rate of around 60%. This significantly varies with demand factors: while the pass-through rate to baseline tariffs, where firms have greater market power because customers are less willing to switch, is only 50%, it increases to 70% in the competitive segment of the market. Although the pass- through rate of independent firms is significantly higher than that of other firms in the competitive market segment, the extent of supply-side heterogeneity is limited. Thus, the firms’ ability to exercise market power and reduce pass-through appears to be constrained by competition and largely determined by demand side factors. Finally, we find that the pass-through rate in the competitive market segment has been approaching unity over the past years, indicating a rise in competitive pressure.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal European Economic Review
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, VW-A, WH-B
Language English
Title Market power and heterogeneous pass-through in German electricity retail
Volume 98
Year 2017
Page from 354
Page to 372
Reviewed? Y
URL http://www.sciencedirect.com/science/article/pii/S0014292117301356
DOI http://dx.doi.org/10.1016/j.euroecorev.2017.07.010

Associations

People
Szücs, Florian (Details)
External
Duso, Tomaso (DIW, Germany)
Organization
Department of Economics DP (Details)
Institute for Quantitative Economics IN (Details)
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