Efficient Retail Pricing in Electricity and Natural Gas Markets
American Economic Review · 2013 · Volume 103 · Issue 3
Abstract
A long line of research investigates whether the retail prices of electricity and natural gas send proper signals about scarcity in order to induce efficient consumption. Historically, regulated utilities have not designed tariffs that set marginal prices equal to marginal costs. Currently, some jurisdictions are opening the retail sectors to competition via "retail choice." These new regimes replace imperfect regulation with imperfect competition as the process by which retail tariffs are formed. We discuss the challenges in evaluating the efficiency of tariffs and present evidence of how pricing has changed in markets with retail choice.
Keywords
Production, Pricing, and Market Structure, Size Distribution of Firms, Electric Utilities, Gas Utilities, Pipelines, Water Utilities, Industry Studies: Utilities and Transportation: Government Policy, Energy: Demand and Supply
Enable JavaScript for citation tools and additional paper interactions.