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.
| Identifer | oai:union.ndltd.org:VIENNA/oai:epub.wu-wien.ac.at:5726 |
| Date | 29 July 2017 |
| Creators | Duso, Tomaso, SzĂĽcs, Florian |
| Publisher | Elsevier |
| Source Sets | Wirtschaftsuniversität Wien |
| Language | English |
| Detected Language | English |
| Type | Article, PeerReviewed |
| Format | application/pdf |
| Relation | https://doi.org/10.1016/j.euroecorev.2017.07.010, https://www.journals.elsevier.com/european-economic-review, http://epub.wu.ac.at/5726/ |
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